JAKARTA (TheInsiderStories) – Shareholders of Indonesian energy company PT Medco Energi International Tbk (IDX: MEDC) has approved the to issue up to 10 percent of the company’s issued and paid-up capital or around 1.77 billion shares, said the company on Monday (14/05).
The private placement will be completed within two years at minimum price of Rp1,305 per share, being the average closing price for the previous 25 trading days prior to the announcement. The company is estimating to raise around Rp2.31 trillion (US$165 million) from the new shares issuances.
The company’s shareholders also approved a share buyback program, to support the company’s employee and management share ownership program.
Hilmi Panigoro, President Director of MedcoEnergi said with the approvals from the shareholders, he expect to continue the steady improvement in the company performance.
Indovest Semesta Sekuritas analyst Aditya Perdana Putra judging the private placement will have a liquidity impact for MedcoEnergi. In addition, he added, that with the operation of Sarulla Geothermal plant will have a significant impact on the company’s future revenue position.
Meanwhile, Director of Investa Sarana Mandiri Hans Kwee, revealed that the world oil price is quite good and in the future will be maintained above $60 per barrel and this will be a positive catalyst for MedcoEnergi. According to him, the company’s future prospects are also influenced by Indonesian and global economic data.
Last year, MedcoEnergi has issued 4.40 billion shares or 24.32 percent the company’s issued and paid-up capital and raised Rp2.64 trillion. In the same year the company owned by tycoon Arifin Panigoro released global bond of $300 million with final coupon of 8.5 percent per annum.
In 2016, MedcoEnergi acquired two major companies and it continues allocates funds for acquiring other assets in the coming years. Medco in mid June offered bonds worth Rp1.27 trillion as some of that funds will fund the said acquisition plan.
The publicly listed firm will also use its bond funds for paying bonds debts scheduled to mature in December of this year and March 2018 and for funding capital expenditure.
Panigoro said, the rights issue launched after the company split its stocks from current 341 billion units with ratio of 4-to-1. Medco is expected to raise Rp1.92 trillion from its rights issue program after stock split.
MedcoEnergi has also informed its plan to launch the initial public offering (IPO) for its newly acquired gold-copper producer PT Amman Mineral Nusa Tenggara or AMNT (formerly PT Newmont Nusa Tenggara). This IPO funds might be aimed to repay the matured debts, also debt used to acquire Amman Mineral.
MedcoEnergi is optimistic that IPO of Amman Minerals will attract high buying appetite of investors, as Amman has large asset size while the capital market is improving and stabilizing.
The company has capacity to serve its existing debt as it booked annual revenues of $583 million, with EBITDA of $274 million but needs huge funding to build the smelter.
The huge debt will challenge MedcoEnergi on smelter project, the very important project. Then the company should have generated funds or capital for building the smelter in five years time to export concentrate or might also cooperate with Freeport on building smelter.
Aside of the issued global bond, the company also receive two loan facilities of Rp2 trillion in the first half of 2017. The first loan came from PT Indonesia Infrastructure Finance of Rp157.5 billion while the second loan was obtained from PT Bank OCBC NISP Tbk (IDX: OCBC) of $150 million or Rp1.98 trillion.
Who controls Medco? Mitsubishi Corp might have restructured its ownership in MedcoEnergy. List of shareholders in December 2015 pointed to Encore Energy Pte Ltd holding 51.26 percent shares, but then declined to 36.44 percent by Dec 2016.
At the same time, Mitsubishi UFJ Bank held 15.28 percent shares. A substantial block of 21.15 percent shares were held by Credit Suisse AG on behalf of trust account client.
Amman Mineral unveils its plan to launch IPO this year. Panigoro however declined to disclose the total amount shares to be offered to the public through the IPO nor the date of listing on the Indonesian Stock Exchange.
MedcoEnergi established by Panigoro has acquired Amman Mineral Internasional (AMI) on June 30, 2016, which controls 82.2 per cent shares of AMNT for $2.6 billion. AMI previously bought AMNT shares from Newmont Mining Corporation and Sumitomo Corporation.
The remaining 17.8 per cent shares of AMNT is owned by Pukuafu Indah. MedcoEnergi holds 50 per cent shares in AMNT. AMI is an Indonesian company whose shares are held by PT AP Investment (50 per cent) and PT Medco Energi International Tbk (50 per cent).
In February 2017, AMNT secured a copper export permit from the Energy and Mineral Resources. The permit granted the company to export 450,826 wmt of copper concentrate for the period of Feb. 15, 2018 until Feb. 15, 2019.
in 2017, MedcoEnergi also announced has acquired 77.68 percent of the shares in PT Saratoga Power, from PT Saratoga Investama Sedaya Tbk (IDX: SRTG) and other shareholders. The deal is said worth Rp1.63 trillion.
Through this transaction, the company increases its effective ownership of PT Medco Power Indonesia (MPI), widening from 49 to 88.62 percent. Meanwhile, the 11.38 percent of the shares in MPI held by International Finance Corporation remained unchanged.
MPI, established in 2004, is Indonesia’s leading medium-scale power producer, with a main focus of acquiring its energy from natural gas and geothermal sources.
MPI currently operates over 520 megawatts (MW) of installed gross capacity (as of September 2017), with the Sarulla Unit 2 geothermal power facility expected to go into commercial operation in October 2017, one month ahead of schedule.
MPI’s gross capacity will increase as Sarulla Unit 3 (110MW) starts to operate commercially, in the second quarter of 2018, and Riau CCPP (275MW) by 2021.
MPI Operation & Maintenance (O & M) business has also expanded, currently operating over 2,000 MW of power plants through third parties. The expansion is driven by two new O & M contracts signed at the end of 2016, whereby MPI operates the Sarulla Geothermal and PLN gas turbine units at eight locations throughout Indonesia.