Singaraja Putra (SINI) Plans Rights Issue of Rp3.6 Trillion and Acquisition of KMS from PTRO for Rp1.73 Trillion

PT Singaraja Putra Tbk (SINI) has announced plans for a Rights Issue (Penambahan Modal dengan Hak Memesan Efek Terlebih Dahulu or PMHMETD) of up to Rp3.6 trillion, alongside a material transaction involving the acquisition of PT Kemilau Mulia Sakti (KMS) from PT Petrosea Tbk (PTRO), an affiliate of the Prajogo Pangestu conglomerate. According to the company’s disclosure on the Indonesia Stock Exchange, the acquisition is valued at approximately Rp1.73 trillion and will be partially funded by the proceeds of the rights issue. This action constitutes an affiliated transaction under POJK 42/2020 due to connections with certain controlling parties, but it does not involve any conflicts of interest. The funds from the rights issue will be allocated to: the acquisition of 99.995% shares in KMS; partial repayment of the company’s debt; and working capital. Management states that this strategy aims to: strengthen the holding business; enter the coal sector, which still has stable demand; support medium-term growth from fossil fuel-based energy; and diversify the business portfolio. Global coal demand remains driven by countries such as China and India, while in Indonesia, coal continues to dominate the national energy mix. If the rights issue and acquisition proceed, the company’s financial position is projected to change significantly: the liability-to-asset ratio will decrease from 1.44 to 0.62; the liability-to-equity ratio will improve from negative to 1.60. This indicates a stronger capital structure following the corporate action. For shareholders who do not participate in the rights issue, their ownership will be proportionally diluted; however, the company will gain substantial additional capital for expansion. The action is subject to: POJK 17/2020 (material transactions); POJK 42/2020 (affiliated transactions); and regulations on PMHMETD. The company must obtain: RUPS approval; an effectiveness statement from OJK; and public disclosure reports. In conclusion, PT Singaraja Putra Tbk is taking a major step with a rights issue of up to Rp3.6 trillion to strengthen its capital structure, repay debt, and finance the Rp1.73 trillion acquisition of KMS. This action has the potential to bolster the company’s fundamentals but carries risks of dilution for existing shareholders.