JAKARTA (TheInsiderStories) – PT Mandiri Cipta Gemilang, a unit of conglomeration firm, PT Lippo Karawaci Tbk (IDX: LPKR), sold the ownership of Lippo Mall Puri to an affiliated party, PT Puri Bintang Terang, it said on Monday (08/31). The sales are made through a Real Estate Investment Trust (REIT) company based in Singapore, Lippo Malls Indonesia Retail Trust (LMIRT).
The issuer will pocketed Rp3.50 trillion (US$240.55 million) from this affiliated corporate action. The parties agreed to complete the transaction by March 31, 2021 or other date as agreed in writing by the parties. Puri Bintang is a subsidiary owned indirectly by LMIRT.
The management emphasized that the transaction is part of the Lippo Karawaci‘ asset-light strategy and is carried out to increase the liquidity. For background, the conditional sale and purchase agreement was signed on March 11, 2019 by the two companies. This Property Transfer Plan is expected to be implemented by the end of December 2020.
The payment options included the proceeds from the rights issue of LMIRT, which will be distributed to Binjaimall Holdings Pte. Ltd., in the form of capital or loans. Second, give a loans to Binjaimall, where then all the funds will be channeled to Puri Bintang and then used by the company to pay the property purchases. Binjaimall is a subsidiary of LMIRT.
Last July, Lippo Karawaci announced has prepared funds of Rp2.12 trillion for expansion in this year. The money obtained from the last year’ rights issue proceed, said the the CEO, John Riady.
Part of the proceeds, he continued, has been used to pay off the issuer‘ obligations, including interest, rental fees, hedging costs, and participation in buying equity at the subsidiary. Until the end of 2019, the developer has used the proceeds to repay corporate principal bonds Rp9.12 trillion, pay off bank loans of Rp2.65 trillion, and repaid of corporate obligations including interest, rent and hedging fees of Rp2.35 trillion.
Lippo Karawaci also injected fund worth of Rp2.68 trillion for PT Prima Aman Sarana, PT Satyagraha Dinamika Unggul, PT Bahtera Perkasa Makmur, and PT Tribuana Jaya Raya for the construction of the Millennium Village, Kemang Office, Holland Village Jakarta, Monaco Bay, St. Moritz Makassar and settlement of obligations. Then, funding the core projects amounted to Rp678 billion and working capital Rp767 billion.
The unit of Lippo Group is an integrated real estate company in Indonesia with total assets of $3.8 billion as of March 31, 2020. The builder’ core business consists of housing development in urban areas, malls and health services. The company is also actively involved in integrated development, hospitality, urban development and management, and asset management services.
Present in 40 cities, the company is a property developer with 1,411 hectares of landbank through two units, PT Lippo Cikarang Tbk (IDX: LPCK) and PT Gowa Makassar Tourism Development Tbk (IDX: GOWA), with ownership 84.0 percent and 62.7 percent. The subsidiaries develops and operates Lippo Cikarang in Bekasi, West Java and Tanjung Bunga in Makassar, South Sulawesi.
In addition, the company also has a 55.4 percent stake in PT Siloam International Hospitals Tbk (IDX: SILO), a network of leading private hospitals in Indonesia, with 37 hospitals in 24 cities throughout Indonesia. Plus, a unit on the real estate investment trust listed on the Singapore stock exchange, namely Lippo Malls Indonesia Retail Trust with assets managed by $1.3 billion in the first quarter of 2020.
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