JAKARTA (TheInsiderStories) – The move of local food producer, PT FKS Food Multi Agro Tbk (IDX: FISH) to acquire the shares of PT Tiga Pilar Sejahtera Food Tbk (IDX: AISA) through a private placement scheme, received a blessing from Indonesian authority. Its unit PT FKS Food and Ingredients joined with Singapore’ Agri Pte. Ltd., have signed contracts on August 6, 2019.
According to Fahri Hilmi, deputy commissioner at Financial Service Agancy (FSA), in a statement published Friday (21/2), the company could carry out additional capital through a private placement in accordance with the resolutions of the shareholders meeting on August 9, 2019. FKS Food will absorbs TPS Food shares worth of Rp329.47 billion (US$23.53 million) or 32.77 percent of paid up capital.
Based on a brief prospectus released on August 2019, FISH will take AISA‘ shares at Rp 210 per share. The funds from the private placement will be used to improve financial conditions, especially reducing the debt to equity ratio, working capital, operational activities and increasing company liquidity.
TPS Food management targeted to carry out this corporate action in the first quarter of 2020. Last July, the food producer announced to issue 1.57 billion shares with a nominal value of Rp210 a share. The price of issued shares is at least equal to the average closing price of the company’ shares for 25 days on the regular market.
TPS Food expect to get an approval from the shareholders on August 9, 2019. FKS FI and its subsidiaries are not affiliated with TPS Food. FKS FI is controlled 99.99 percent by FKS Food and Agri Pte. Ltd. FKS Group is famous on the business of distributing soybean, sugar refineries and wet corn milling.
The company that serves many Asian markets has another business unit in Indonesia through FKS Multi Agro. Its unit’ chairma is Chandy Kusuma, son of FKS Group founder, Edy Kusuma.
According to TPS Food management, there was no change in controlling ownerships after the private placement. Public will hold 2.82 percent Series A shares and the other party controls the Series B shares.
Trophy 2014 Investor Ltd., hold of 6.11 percent, Primanex Ltd., 3.62 percent, and Morgan Stanley and Co LLC 4.38 percent. Then, JPMCB NA RE-Throphy will hold as much as 6.27 percent, BBH Luxembourg S/A Fidelity by 5.36 percent, public 38.66 percent, and FKS FI or other investors 32.77 percent.
TPS Food hope the funds from the private placement will give a positive impact to the company, reduce the debt to equity ratio, finance the company’ operational activities and increase the liquidity of stock in the market.
Recently, the company had faced a financial problem, as there are allegedly double accountancy and data differences over the company 2017’ financial report. Financial Professional Coaching Center under Ministry of Finance has summoned TPS Food Management, Ernst and Young, public accountant, and the accountant office that audited the 2017 financial report.
The 2017 financial report was audited by Amir Abadi Jusuf, Aryanto, Mawar & Partners public accountant office. It affiliated with the audit firm, tax firm, and world-reputable consultant RSM International.
Ernst and Young found some differences between the internal data and financial records used by the auditors. It explains that there is allegedly Rp4 trillion overstatement on the accounts of receivable, inventories, and fixed assets in TPS Group. Moreover, there are Rp662 billion sales and Rp329 billion EBITDA overstatement on the subsidiaries.
The audit also found Rp1.78 trillion funds flow through several schemes such as bank loan, time deposits withdrawal, funds transfer in the bank account, and financing of expenses of affiliated parties, from TPS Group to the former management.
TPS Food also faced several debt repayment obligations. Company has three postponement requests over the debt repayment obligations through its subsidiaries. On March, they were asking for more delay due to this month on 8, 12, and 15 respectively. But its unclear how the debt payment continues.
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