Investigasi Hukum

XL Axiata to pay off debts to Malaysia parent through rights issue

XL Axiata Tbk has secured permission from the Financial Services Authority ( OJK ) to collect public funds worth Rp 8.7 trillion ( US$651.4 million ) through a rights issue. Most of the proceeds, worth $500 million, will go to its parent company, Malaysia-based Axiata Group Bhd, as a debt payment.

The company will issue 2.75 billion new shares, providing preemptive rights for every holder of 100 shares of EXCL to buy 25 new shares. The offering price of the new shares is Rp 3,150 per unit.

“This rights issue is an important achievement for EXCL [XL Axiata], under which XL Axiata will be able to repay debt liabilities amounting to $500 million to our parent company,” said XL Axiata chief financial officer Mohamed Adlan in a press statement on Monday.

Axiata Group, which currently controls 66.4 percent of the company’s stock, has announced its commitment to execute all of its rights to purchase the new shares, Adlan continued. Consequently, it will have to prepare $432.5 million, which will ultimately go back into its pockets for the debt payment.

Credit Suisse ( Singapore ) and state-controlled securities company Mandiri Sekuritas will both act as standby buyers in the corporate action, meaning that they will absorb any remaining new shares, totaling at least $67 million.

“The plan of XL Axiata to hold a rights issue will run well as it has received an effective statement from the OJK,” Daewoo Securities Indonesia wrote in a note to investors.

The rights issue plan is in line with the company’s strategy to manage its balance sheet by strengthening its financial position while at the same time minimizing the risk of foreign-denominated liabilities.

After repaying its debt, the company will have its debt to equity ratio halved from 1.8 to 0.9.

XL Axiata registered an Rp 5.6 trillion revenue and an Rp 169.3 billion net profit, erasing the net loss of Rp 758.1 billion recorded in the same quarter last year. Its total revenue profile was dynamic, according to Daewoo Securities Indonesia analyst Dang Maulida.

“Competition between XL Axiata with other major telecommunications operators in Indonesia, such as Telkomsel and Indosat, is the main reason behind the dynamics, in our view,” she said. ( ags )