JAKARTA (TheInsiderStories) – PT Smartfren Telecom Tbk (IDX: FREN), a unit of Sinar Mas Group, will offer 10 percent shares through private placement scheme. Along with it, the telecommunication operator also plan to release 67.01 billion of new shares and warrants as many of 36.30 billion shares by the end of 2018.
However, FREN has not determined the time for the implementation of this private placement, whether it will be carried out before or after the implementation of the rights issue. The company also has not identified potential investors who will participate in this corporate action. What is clear, funds from this private placement will be used for working capital.
In the disclosure information to the Indonesia Stock Exchange (IDX) on Sept. 28, the company expect to raise at least Rp8.00 trillion (US$551.72 million) through the corporate action. According to President director of FREN, Merza Fachys, the operator set the bid price Rp120 a share for the private placement and Rp100 each for the rights issue.
Managing Director of Sinar Mas Group, Gandi Sulistyanto Soeherman has said the company still looking for prospective investors who are suitable for Smartfren throught the private placement plan. Since last year FREN has offered mandatory convertible bonds Rp15 trillion through a private placement mechanism but have not found a suitable investor.
Based on the prospectus, Smartfren offered every 13 old share exchanged with one new share. Then, every 13 shares resulting from the exercise of rights are attached to seven series of warrants which are provided free of charge as an incentive for holders of preemptive rights exercising their rights.
The new shares is traded on the IDX and carried out from Nov. 16 -30, 2018. The warrants can be carried out during the validity period, starting from May 16, 2019 to Nov. 22, 2021 where every one Series II Warrants has the right to purchase one new share of the company.
PT Bali Media Telekomunikasi as the owner of 31.13 percent shares of FREN, stated that it would not implement the rights. But other shareholders PT Global Nusa Data (hold 27.40 percent) and PT Wahana Inti Nusantara (owned 29.65 percent) said that they would exercise the rights as much as 15.49 billion shares and 16.76 billion share, respectively. The standby buyer for the rights issue is PT Sinarmas Sekuritas, also unit of Sinar Mas Group.
Based on the financial statements as of Dec. 31, 2017 and March 31, 2018, FREN is still experiencing losses so it requires additional funds to pay debts, working capital and additional investment. Throughout 2017, the company’s revenue grew by 28.35 percent to Rp 4.67 trillion compared to previour year.
Unfortunately, this increase in revenue has not been able to reduce losses that must be borne by Smartfren. Throughout 2017, FREN’s losses actually increased by 53.09 percent from Rp1.97 trillion in 2016 to Rp3.02 trillion caused the company’s operating expenses swelled last year.
FREN postal general and administrative expenses surged 26.72 percent to Rp6.21 trillion, exceeding the amount of revenue earned by FREN. In addition, sales expenses increased by 31.56 percent to Rp579.76 billion.