Indonesias Kimia Farma Plans Rights Issue By Offering 1.5b New Shares

Indonesia’s state-owned pharmaceutical company Kimia Farma is planning to issue 1.58 billion of new shares in a rights issue process, according to a stock exchange filing.

The new shares will represent 22.14 per cent of the company’s issued capital and paid in capital.

The price for the new shares is still unknown, however, Kimia Farma’s CEO had earlier mentioned that the firm was looking to raise around 2 trillion to 3 trillion rupiah ($140 million to $210 million) of additional capital from the rights issue plan.

The proceeds will be used to meet working capital needs as well as to support business development.

The implementation of this rights issue plan will subject to the shareholders’ approval in the extraordinary meeting scheduled on 18 September 2019. Meanwhile, the execution could be conducted in 12 months after the shareholders’ approval.

According to a report by Bisnis Indonesia, Kimia Farma also plans to grow the business through the inorganic way as well as repay its corporate loans using the rights issue proceeds.

In March 2018, the company acquired 56.77 per cent stake in listed-pharma company Phapros from another state-owned company Rajawali Nusantara Indonesia which was valued at 1.361 trillion rupiah.

Aside from Phapros, Kimia Farma also announced an acquisition of 60 per cent stake in Saudi Arabia’s Dawaa Medical Limited Company for $10.1 million in a share subscription investment scheme.

Kimia Farma may also seek inorganic growth in the healthcare business and it is reviewing options to acquire state-owned and private hospitals in the second half of this year.

On the other hand, the company also needs to increase its outstanding shares in the stock market which can be achieved via the rights issue process.

Currently, Kimia Farma has 9.98 per cent outstanding shares that could be traded in the stock market. The company expects to increase the outstanding shares to 20% to 30% after the completion of the issue.