Indah Kiat to sell Rp 2.5t new shares

JAKARTA (JP): PT Indah Kiat Pulp & Paper will issue rights shares this year to raise about Rp 2.5 trillion (US$1.042 billion) to finance expansion projects.

Indah Kiat, listed on the Jakarta Stock Exchange (JSX), will sell about 2.5 billion new shares in the rights issue, billed as the largest ever domestic offering.

Analysts have estimated that the company will sell the rights shares for about Rp 1,000 each.

Shareholders, they said, would be allowed to subscribe to 50 rights shares for every 45 shares in hand, Bisnis Indonesia reported yesterday.

"This will be the biggest rights issue in the history of the Indonesian capital market," an analyst said.

The newspaper said that about 70 percent of the proceeds, or Rp 1.77 trillion, would be used to finance the construction of a plant in Perawang, Riau, to produce up to 785,000 tons of pulp yearly.

"We expect that the new plant, which will cost around $1.2 billion to build, will begin operating in the second quarter of 1999," he said.

He said 30 percent of the proceeds, or Rp 756 billion, would be used to finance the construction of a plant to produce up to 425,000 tons of paper yearly.

The paper plant, which will cost $415 million, would start commercial operations in the third quarter of next year, he said.

Indah Kiat is 54.39 percent owned by PT Purinusa Ekapersada -- a subsidiary of Sinar Mas Group owned by Eka Tjipta Widjaja -- 19.99 percent by CHP International Corp. of Taiwan, 8.54 percent by YFY Global Investment Corp. of Taiwan and by public investors. (bnt)