Regent Pacific buys stake in Budi Acid
JAKARTA (JP): Hong Kong-based fund manager Regent Pacific Private Equity Ltd (RPPEL) will acquire a 5 percent stake in agrochemical firm PT Budi Acid Jaya in a new equity-for-debt swap.
In a statement issued after Budi Acid's extraordinary shareholders meeting here on Friday, RPPEL said the investment was part of two private equity and corporate restructuring investment funds under the "Asian Opportunity" banner.
Budi Acid will issue 12.5 million new shares to RPPEL at Rp 2,800 (37 U.S. cents) per share, compared to the face value of Rp 500.
"Through an innovative structure, the proceeds from the issuance will go toward reducing the debt of Budi Acid, thereby improving operating performance and cash flow, as well as strengthening the balance sheet," the statement said.
Budi Acid vice president Sudarmo Tasmin said the transaction involved about Rp 35 billion (US$4.7 million), thus reducing the company's debt burden from $41 million to $37 million.
The company owes $36 million to a syndicate of 18 banks led by Overseas Chinese Bank Cooperation of Singapore, $5 million to Bank Niaga and Rp 39 billion to state-owned Bank Ekspor Impor Indonesia.
Sudarmo said the company had reached agreement with its creditors to stretch settlement of debts over a five-year period.
He said Budi Acid and RPPEL were the first companies to benefit from a recently introduced capital market regulation allowing listed firms to issue new shares up to a specified limit without resorting to a rights issue offering.
The deal between the two companies will be completed by mid- December, he added.
Jakarta-based associate director of RPPEL Miscellia Dotulong had been appointed to Budi Acid's board of directors.
RPPEL said it is actively investing in fundamentally sound companies suffering from liquidity problems or mismatched assets- liabilities.
"Indonesia remains firmly on Regent's map: despite all the adversities and uncertainties, RPPEL has upheld its commitment to Indonesia and its corporate sector, as evidenced by a track record of investments successfully concluded in the past few months," it said.
RPPEL managing director Ascanio Martinotti said that his company was bullish about Indonesia and would continue to invest in sound firms.
It has invested $28 million in several selected companies this year, Martinotti said, and had allocated $60 million to be invested next year.
RPPEL is the private equity investment arm of Hong Kong and Frankfurt-listed Regent Pacific Group. It is investing throughout Asian and in other emerging markets of South America, Russia and eastern Europe.
The company has assets under management in excess of $1 billion, backed by cash and tangible liquid assets of approximately $110 million.
Budi Acid Jaya, founded in 1979, is a member of the Sungai Budi Group, one of Southeast Asia's largest agrochemical industrial concerns. It is the world's largest integrated manufacturer of tapioca starch.
The company booked net sales of Rp 546 billion as of September, an increase of 150 percent from the same period last year. (29)