Medco may raise $300m from Luxembourg, Jakarta share sales
Medco may raise $300m from Luxembourg, Jakarta share sales
Netty Ismail, Bloomberg, Singapore
PT Medco Energi Internasional, Indonesia's biggest publicly traded oil producer, plans to raise about US$300 million selling stock in Luxembourg and Jakarta, 25 percent less than Medco's founders targeted three months ago.
"The existing shareholders are offering their shares," Gamala Katoppo, head of investor relations at Jakarta-based Medco, said today. "Investors can choose between the common shares and the Luxembourg-listed shares."
Chief Executive Hilmi Panigoro said on April 6 that Medco, which then planned to list in London or Singapore, might increase the company's market value to about $1.5 billion by selling about $400 million of shares. Panigoro said two days ago the amount raised will depend "on the market reaction." The company will raise about $300 million, bankers familiar with the plan said today, asking not to be identified.
Medco, with a current market value of $1.28 billion, is counting on high oil prices and demand for its shares, which rose to a record in June, to attract investors to its planned offering. Crude oil futures touched $62.10 a barrel on July 7, the highest since trading began in 1983. Oil prices helped boost Medco's operating profit by 36 percent to $51.8 million in the first quarter.
"The environment is good, the oil price is high and the sentiment in Indonesia is quite good," Katoppo said in a telephone interview today. "We would like to do it as soon as possible."
Medco's founding family, which is seeking to sell as much as 35 percent of the company to pay debt, will begin promoting the share sale to investors in Asia, Europe and the U.S. this month, Katoppo said. The company plans to increase the free float, or the proportion of shares available for purchase in the market by investors, to about 40 percent from about five percent.
"It's good for the company to increase its free float," Katoppo said.
Shares of Medco closed at 4000 rupiah (41 cents) on June 10, the highest since the stock started trading on the Jakarta Stock Exchange in October 1994. The stock is trading at Rp 3775 today, having almost tripled from a low of Rp 1,275 on July 27, 2004.
The proceeds will be used to pay debt from the Panigoro family's purchase of a 60 percent stake in New Links Energy Resources, which controls 86 percent of the oil producer. The Panigoro family bought the shares from PTT Pcl and Credit Suisse First Boston in February.
Credit Suisse First Boston, the securities unit of Switzerland's second-biggest bank, Merrill Lynch & Co., the world's biggest securities firm, and Singapore-based Overseas Bank Ltd. are managing the sale.