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CORPORATE ACTION - JAKARTA. PT Trans Power Marine Tbk (TPMA), an Indonesian marine transportation company, is planning an inorganic expansion. To fund this, TPMA will increase its capital by offering a rights issue, also known as a preemptive rights issue.
As previously reported, TPMA plans to issue a maximum of 1.13 billion new shares, equivalent to 30.03% of the fully paid and issued capital.
The funds raised from this new share issuance will be used to execute TPMA's business expansion, both organically and inorganically, and/or to supplement working capital.
However, Ronny Kurniawan, the CEO of Trans Power Marine, emphasized that the funds from the rights issue will be used to carry out an inorganic expansion by acquiring another company.
"The funds will definitely be used for acquisitions, but we cannot disclose detailed information about the target company yet. However, we have obtained approval from our shareholders," he explained in a public presentation on Friday (26/4).
Despite this, Kurniawan stated that his company will soon report to the Financial Services Authority (OJK), at the latest by the end of April or early May, to provide a complete prospectus and seek approval from the authorities.
Arvin Lienardi, an Investment Analyst at Stockbit, said the success or failure of a rights issue largely depends on how the funds are used. Meanwhile, TPMA's plans for the use of funds are still very limited.
Assuming a maximum of 1.13 billion new shares and a closing price on Friday (26/6) of IDR 670 per share, TPMA could potentially raise fresh funds of IDR 757.10 billion.
"If the funds are used to acquire a company with profitability above TPMA and a valuation below TPMA with a price to earnings (PE) ratio of 5.8 times, this will be positive," Lienardi wrote in his research.
