PT Barito Pacific Tbk (IDX: BRPT) prepared capital expenditure around US$175 million this year, part of the five years planned of spending of $8.32 billion - Photo by the Company

JAKARTA (TheInsiderStories) – Shareholders of PT Barito Pacific Tbk (IDX: BRPT) approved the company’s plan to issue new shares as much as 5.6 billion shares or 40 per cent of the issued and fully paid shares of the company at nominal value of Rp500 per share, which enables the company to raise maximum funds of US$1 billion.

The company said around $755 million of the rights issue proceeds will be used to acquire 66.67 per cent of Star Energy Group Holdings Pte Ltd shares from from Prajogo Pangestu and the remaining funds will be used to strengthen its working capital.

The company is hoping that the acquisition of Star Energy will transform the company into an integrated energy company, with assets ranging from geothermal to petrochemical.

Pre-emptive rights will be granted to all shareholders of the company. If shareholders declined to exercise their rights in the second rights issue program (PUT II), their shareholding will be diluted by a maximum of 28.63 per cent.

The company said about 52 per cent of the rights issue proceeds will be used to settle the remaining purchase price in connection with the proposed acquisition through the issuance of shares of the Company exercised by businessman Prajogo Pangestu (inbreng transaction);

About 24 per cent of the rights issue proceeds will be used to pay its financial liabilities. The remaining funds will be used to strengthen the company and its subsidiaries’ working capital.

The company will hold Extraordinary Shareholders Meeting on Jan. 22, 2018 to seek shareholder approval over the rights issue plan.

The company is hoping that the acquisition of Star Energy will transform the company into an integrated energy company, with assets ranging from geothermal to petrochemical.

President Director of the company, Agus Salim Pangestu said the transaction will allow the company to acquire Star Energy. In addition to providing additional funding, the rights issue will also be “an important milestone” of the company’s transformation process.

The company said portion of the new rights will be allocated to new institutional investors. It hopes that the rights issue will also increase the public shareholding in the company, which will certainly improve the liquidity of the company’s shares trading on the market.
The company said it will also seek approval from its shareholders to buy back as many as 100 million shares at the cost of Rp 200 billion. The funds to buy back the shares will come from internal cash flow. The buyback shares program will be realized from Dec. 15, 2017 through to June 14, 2018.
In the nine months to September period, Barito booked revenues of US$1.42 billion, increased 28.4 per cent from the same period last year.

Business Revival

Prajogo Pangestu became the controlling shareholder of Star Energy since June, 2007, when his Star Energy Investment Limited (SEIL) acquired a 71 per cent shareholding in the company for $300 million. The remaining 29 per cent is owned by London-based Ashmore Investment. Prajogo owns 60 per cent of SEIL, with business partner Agus Prajosasmito holding the remaining 40 per cent, giving Prajogo a 42 per cent interest in Star Energy.

Star Energy develops geothermal power plant Wayang Windu. The geothermal power plant represents more than a simple commercial asset for Prajogo and his partners. It is also a foothold in geothermal, a sector expected to boom as Indonesia taps more of its renewable energy resources.

Prajogo’s move into energy also demonstrates his resilience. Once the world’s largest exporter of plywood, Prajogo was forced out of sight when the 1998 East Asian financial crisis dried up demand.

Then, suddenly, he was back. In 2007, Barito acquired a 62.76 per cent stake in petrochemical giant PT Chandra Asri Petrochemical Tbk (IDX: TPIA) and its subsidiary PT Styrindo Mono Indonesia for Rp 9.7 trillion. Chandra Asri producers ethylene, polyethylene and propylene, raw materials for the production of plastics.

The following year, Barito Pacific acquired a 77.93 per cent stake in listed polypropylene producer PT Tri Polyta Tbk for $180 million. The purchases established Prajogo’s hold on a critical business, so far the only one of  its type in Indonesia. Now he is moving ahead in energy.

Star Energy was founded six years ago by businessman Supramu Santosa. It owns the Kakap oil and gas block in Natuna in the Riau Islands, which has a daily production volume of 8,000 barrels of oil and 60 million cubic feet of natural gas. Oil and gas assets still at the exploration stage are in Bayumas in Central Java, Sebatik in East Kalimantan and Sekayu in South Sumatra.

Wayang Windu unit one, which has a capacity of 110 MW, has been in operation since 2000. The $200 million Wayang Windu unit two has a capacity of 117 MW. With a combined generating capacity of 227 MW, Star Energy Wayang Windu is the largest private geothermal power plant company in Indonesia.

PT Barito Pacific Tbk was established in 1979 under the name of PT Bumi Raya Pura Mas Kalimantan. The Company started out as an integrated wood-based company. Moreover, Barito Pacific was highly regarded in forestry and timber industry in the 1980s.

In 1993, the company listed its shares on the Jakarta and Surabaya bourses (recently merged to become the Indonesia Stock Exchange/IDX) as PT Barito Pacific Timber Tbk. The result of this listing was used by the company to embark on a massive industrial forest plantation development programs and to secure sustainable supply of logs to feed supply the company’s wood processing mills. At the time, the company had 5 (five) processing mills altogether, producing plywood, blockboards, particle boards and woodworking products for exports to Europe, Asia and America.

The Asian financial crisis in 1997-1998 had forced the company to discontinue the production of plywood. The company then pursued the strategy of downsizing its timber-based operations by only producing particle board in Banjarmasin, South Kalimantan, whilst diversifying its business into other resource-based industries.

Preceded by several years of thorough planning and preparation, Barito Pacific has been transformed into a fully diversified resource-based enterprise.

In 2007, one key decision in the company’s ongoing transformation was the change of name, identity and colors of PT Barito Pacific Timber Tbk to PT Barito Pacific Tbk. The company decided to drop the word ‘Timber’ to reflect the diversified scope of its businesses today and in the future.

The acquisition of PT Chandra Asri in 2007, which made the company the controlling majority shareholder with 70 per cent shares in the only olefin producer in Indonesia, marks a key milestone for Barito Pacific. The inclusion of Chandra Asri in the company’s portfolio has given Barito Pacific a strategic base from which to grow downstream oil and gas businesses, while at the same time also continue to seek opportunities to develop stakes in the strategic energy resources sector in the future.

That acquisition then followed by the acquisition of PT Tri Polyta Indonesia Tbk, a major downstream producer of polypropylene that sourced its propylene raw material from Chandra Asri, in June 2008.

In 2011, PT Chandra Asri and PT Tri Polyta Indonesia Tbk merged to become PT Chandra Asri Petrochemical Tbk, the largest integrated petrochemical producer in Indonesia.

Barito Pacific is currently engaged in the forestry, petrochemicals, property and plantation industry sectors, and ultimately evolved into a fully diversified resource-based enterprise with growing interests in the mining and energy sectors, among other developments. (*)