Astra issues new shares to raise US$158m

Astra issues new shares to raise US$158m

Dow Jones, Jakarta

Indonesia's largest automaker PT Astra International said Wednesday it hopes to raise US$158 million, or Rp 1.4 trillion rupiah, through a rights issue in January, which is part of a debt restructuring agreed with creditors last week.

Astra will issue 1.429 billion new shares through the rights issue at Rp 1,000 per share. Astra said that under the rights issue shareholders could buy seven new shares for every 13 shares held.

The company, which manufacturers vehicles under a joint venture with Toyota Motor Corp., said it will use $60 million of the rights issue to help repay debt.

Creditors agreed last week in Singapore to an $850 million debt restructuring, which allows Astra to repay only half the $150 million coming due this year, and gives the company an option to extend debt repayment to 2009 from 2006.

Astra has been unable to repay its debt since the 1997-98 Asian crisis slashed car sales, and pushed up the cost of foreign borrowing in terms of local currency.

Shareholders of Astra will meet Friday to vote on the plan to issue rights.

Astra's shares rose 4.8 percent on the news of the rights issue to Rp 2,750, as the market reacted positively to efforts to reduce the company's debt.

Astra plans to use about $40 million from the rights issue for investment in units such as PT United Tractors, which assembles heavy equipment, the company said in a statement. Just under $60 million will go into working capital, it added.

Shareholders who own Astra stock before the close of trade Jan. 14 will be eligible for the rights issue.

Singapore's Cycle & Carriage Ltd., which owns a 32 percent stake in Astra, has said it will support the issue by subscribing to its full entitlement.

The rights issue price was in the middle of an earlier Rp 500 to Rp 2,000 range that Astra had indicated to the market. UBS Warburg, JPMorgan Chase Bank and ING Barings are underwriting the issue.

Under its debt plan, Astra plans to repay $75 million by Dec. 31, about half the amount which is set to come due this year. The company will repay on average, between $70 million and $100 million every year thereafter through 2006. At that time, the company will attempt to refinance the remaining debt.