XL Axiata plans rights issue to pay down USD500m loan

2 Feb 2016

Indonesian mobile operator XL Axiata, a majority-owned subsidiary of Malaysia’s Axiata Group, is planning to conduct a rights issue to repay a shareholder loan of USD500 million, the firm confirmed in a statement. ‘To demonstrate its continued commitment as major shareholder of XL, Axiata Group, [which] currently owns approximately 66.4% of XL, has expressed its intention to fully subscribe for its pro rata rights entitlement under the rights issue,’ the statement read, adding: ‘Any remaining shares not subscribed for other shareholders in the rights issue are expected to be fully underwritten.’ Setting the fund raising as a rights issue will enable existing shareholders to play an ongoing role in the growth of the company, it notes. ‘Net proceeds from the rights issue will be used to repay our US dollar denominated shareholder’s loan,’ said XL President and CEO, Dian Siswarini. The process is anticipated to be completed during the first half of 2016.

TeleGeography notes that in December 2015 unconfirmed ‘industry insiders’ suggested that XL Axiata was mulling options to raise up to USD500 million this year as it seeks to trim its debt, which had spiralled to IDR25.7 trillion (USD1.8 billion) by end-September 2015, more than double the IDR12.5 trillion it was carrying in September 2012. With its debt-to-equity ratio standing at 216% – the highest of any listed Indonesian mobile operator – XL Axiata has said that it will strengthen its balance sheet and look to focus on signing up/retaining more ‘profitable’ subscribers, rather than pursue a policy of simply increasing its user base.

Indonesia, Axiata, XL Axiata