Bareksa.com - Property developer Sentul City Tbk (BKSL) plans a rights issue to tap funding from the capital market with expected proceeds at most Rp2.32 trillion. The proceeds will be used for acquiring an affiliated entity, so the company can enlarge its land bank.

According to an information disclosure published 29 December 2016, Sentul City will offer at maximum 20.72 billion new shares with rights. The amount equals to 37.5 percent of its paid capital after the corporate action. Holder of 5 old shares is entitled to get 3 rights, which enable the holder to buy new shares at price Rp112 a piece. The execution price is premium to the current price around Rp92 at the regular market.

The expected proceeds of Rp2.32 trillion equals to the acquisition price of 99.99 percent shares in PT Graha Sejahtera Abadi (GSA), which has land bank area of 273 hectares in Bogor. According to appraisal from Public Appraiser Suwendho Rinaldy & Partners, the 273-hectare land bank of GSA has market value of Rp3.74 trillion. Thus, the average price per square meter is Rp1.27 million.

As information, GSA is affiliated with Sentul City. The reason is the current shareholder of GSA is PT Sakti Generasi Perdana (SGP), which also holds 7.94 percent shares in Sentul City. SGP will also act as the standby buyer in this corporate action.

At the same time, Sentul City will also offer warrant Serie I as many as 12.08 billion units at price Rp115 each. The company expects to get funding from warrant issue as much as Rp1.39 trillion. The conversion ratio of old warrants to rights is 12:7. The proceeds from warrant issue will be used for working capital and business expansion.

Figure: Sentul City's land bank ready to develop (hectares)

Source: Sentul City Financial Report, Bareksa.com

The acquisition aims at controlling land area currently held by GSA, so Sentul City will at least have land in four areas, namely, Desa Citaringgul, Desa Cijayanti, Desa Sumur Batu and Desa Karang Tengah. Furthermore, the concept of property and infrastructure development can be integrated which automatically lead to higher selling price.

Previously, both parties have agreed on a condition, namely all GSA's land from SGP will be taken over by Sentul City and the payment will be done using the company's new issued shares. After the rights issue, SGP will hold 27.07 percent shares in Sentul City.

Sentul City will hold an extraordinary general meeting of shareholders on 7 February 2017. If the meeting does not approve the rights issue plan and the affiliation transaction, the plan will be proposed in another twelve-month period. (hm)