UT to launch rights issue

The Jakarta Post, Jakarta

Publicly listed heavy equipment maker PT United Tractors announced on Friday it planned to issue some 1.85 billion new shares through a rights issue next month to raise cash to refinance its debt.

The company said in a statement to the Jakarta Stock Exchange (JSX) that it expected to raise up to Rp 1.76 trillion (US$207 million) in proceeds from the rights offer.

The indicative price of the new shares is to be set between Rp 350 and Rp 950 per share. The exact price will be determined after shareholders approve the plan at an extraordinary meeting on May 14.

The new shares are to be listed on the JSX between May 31 and June 7. UT did not mention the ratio of the rights issue.

The company said around 80 percent of the proceeds would be used to repay debts, while the remainder will be used to finance business operations.

UT has been trying to restructure its $241 million debt, and sold its 60 percent stake in coal mining company PT Berau Coal last week.

The company's creditors include Sumitomo Corp., Marubeni Corp. and state-owned Bank Negara Indonesia (BNI).

UT, which is 49 percent owned by PT Astra International, the country's largest automotive company, holds a 40 percent share in the domestic heavy equipment market.

Despite a slight decline in sales, UT recorded a net profit of Rp 342 billion last year, up from Rp 300 billion in 2002. During the same period, its sales figure dropped to Rp 6.87 trillion from Rp 6.88 trillion.

Last week, UT's mining contractor unit PT Pamapersada Nusantara (Pama) won a $1 billion coal exploration contract from East Kalimantan-based coal mining giant PT Kaltim Prima Coal (KPC).

Pama is also a contractor for other coal mining firms.

Pama plans to buy equipment from UT to fulfill the KPC contract, and the purchase is expected to help increase UT's sales by 10 percent this year.

Coal mining-related business contributed 40 percent of UT's revenue last year.