Investors will also receive two free warrants for every five rights shares. The warrants, which have a threeyear maturity date, can be exercised at maturity at 54 cents per share and at a conversion ratio of one warrant to one share.
Assuming that all the warrants are exercised, the company stands to raise another $381 million. The move follows guidance from management some two weeks ago that it was in talks with bankers on a rights issue, though no details were confirmed then.
The offer price represents a 60 per cent discount to the closing price of 45 cents on the day prior to the lunchtime announcement.
The company's net asset value stood at 46 US cents as at March 31. Shares of Golden-Agri dropped as much as 7.78 per cent yesterday and ended down 5.56 per cent at 42.5 cents. Controlling shareholders Massingham International and Flambo International Limited - which own 48.6 per cent of the company in total - will fully subscribe for their entitlements. BNP Paribas, Credit Suisse and UBS AG are the lead managers and underwriters for the deal.
'The proposed rights issue will strengthen our competitive position and prepare us for potential acquisition opportunities when they arise,' chief executive officer Franky O Widjaja said in a press statement.
From the net proceeds of the rights issue, 20 per cent will be used as working capital purposes, which will include the repayment of borrowings. The remainder will be used for expansion purposes, such as M&A and organic growth, the company said. For the latter, this could include the acquisition of land, planting of oil palm trees, and construction of mills and refineries.
Based on the company's first-quarter figures, its debt-to-equity - calculated as its total liabilities divided by shareholders equity - was about 0.44 times. Golden Agri's first-quarter net profit slumped 93.7 per cent to US$8.58 million.
Source: Business Times