LippoMall, Kemang Village (Image credit : Lippo Mall)

JAKARTA (TheInsiderStories) – Indonesian property developer, PT Lippo Karawaci Tbk (IDX: LPKR) will hold rights issue for 47.82 billion shares or 67.74 percent of its issued and paid capital. The company targeting the rights issue process finalize end of this year, said the company last week.

The rights issue price is tagged at Rp235 per share. The rights exercise price represents a discount of 8.2 percent to the last closing price of the company on March 11, 2019.

Its expecting the company would get Rp11.23 trillion (US$$785.31 million) for paying debt, paying company’ obligations, and increasing direct and indirect participation of subsidiaries.

On March 22, Lippo Karawaci announced has secured funding around $1.01 billion to support the businesses and pay the debts. The funding comprising of $730 million from right issue and $280 million from the completion of its asset divestment plans.

The developer said, the two fund managers, George Raymond Zage III and Chow Tai Fook Nominee Ltd., have signed an undertaking agreement to purchase rights and to subscribe the rights issue shares with a total commitment of $70 million.

While, the Riady family, through PT Inti Anugerah Pratama or its wholly owned subsidiary, will act as a standby purchaser for any remaining rights issue shares not subscribed by other shareholders. The rights issue has raised the approval on April 18.

For the divestment plans, Lippo Karawaci has objective of realizing a total of $280 million of proceeds by end 2019. On Jan. 10, the unit of Lippo Group announced the sale of its interest in two healthcare joint ventures in Myanmar, a 40 percent stake in Yoma Siloam Hospital Pun Hlaing Ltd., and a 35 percent stake in Pun Hlaing International Hospital Lmtd., to OUE Lippo Healthcare Ltd.

The sale is expected to generate $20 million of net proceeds when the transaction is completed in first half of 2019. Then, On March 11, LPKR entered into a conditional sale and purchase agreement with Lippo Malls Indonesia Retail Trust (LMIRT), pursuant to which the developer agreed to sell the retail components of Lippo Mall Puri for an aggregate consideration of $260 million.

The acquisition is targeted to complete in second half of 2019, subject to regulatory, shareholders and other approvals. This funding program is set to right-size Lippo Karawaci’ balance sheet through deleveraging and repayment of up to $275 million of debt obligations, provide the company with sufficient liquidity buffer to fund debt interest and REIT rental obligations through year end 2020 and unlock shareholder value through investments in existing key projects.

Over the next three years, LPKR intends to invest up to $100 million of the funding proceeds in the development of eight existing key projects currently under construction–Holland Village, Millennium Village, Monaco Bay Residences, St. Moritz Makassar, Kemang Office, Embarcadero, Lippo Office Thamrin and Holland Village Manado.

The cost to complete these existing projects is estimated to amount to around $275 million, and will be fully funded by the $100 million investment capital, account receivables to be received from units sold, and future sales from completed projects and projects in construction.

Lippo Cikarang

While, PT Lippo Cikarang Tbk (IDX: LPCK) is going to give debt to Meikarta’ project developer in Bekasi, East Java, PT Mahkota Sentosa Utama for working capital, through rights issue. Its unit will issue 1.98 billion shares at Rp1,495 a piece to raise Rp2.96 trillion funding from the rights issue.

Lippo Karawaci trough the unit intended to invest up to $200 million of the funding to develop Meikarta projects, by subscribing 54.4 percent rights entitlement, and acting as standby purchaser for any remaining rights issue shares not subscribed by other shareholders of LPCK. The unit planned to issue new shares with total amount $200 million.

The Meikarta project is expected to be the next breakthrough integrated development that will boast world-class infrastructure and facilities including shopping malls, international hospitals, universities, an international exhibition center, as well as a financial and technology hub.

Lastly, as part of the sale of Puri Mall, the company expects to incur transaction-related taxes and expenses and REIT rental obligations amounting to $60 million.Additionally, LPKR is committed to maintaining its existing 30.7 percent stake in LMIRT by participating in the potential future equity fundraising by LMIRT associated with the acquisition of Puri Mall. It is estimated that this would require approximately $60 million of funding from LPKR.

To deliver on this new business strategy, LPKR announced a new leadership team. Its newly nominated Board of Commissioners, comprising Independent President Commissioner John Prasetio, along with commissioners Stephen Riady, George Raymond Zage III, Kin Chan, and Anangga W. Roosdiono.

In addition, the company also announced the appointments of John Riady as Chief Executive Officer, Surya Tatang as Chief Financial Officer, Peter Yuas Director of Projects,and Bret Matthew Gineskyas Head of Investor Relations. Marshall Martinus will continue in his role as Chief Operating Officer.

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