Lippo Malls Indonesia Retail Trust (LMIRT) is proposing to raise $280 million through a non-underwritten renounceable rights issue to partly finance its acquisition of Lippo Mall Puri in Jakarta.

The trust's manager expects to issue about 4.68 billion rights units on a pro rata basis of 160 rights units for every 100 LMIRT units, at an indicative price of six cents apiece. This is a 47.8 per cent discount to the closing price of 11.5 cents on Sept 17, the unit's last trading day prior to Friday's announcement.

The trust is looking to acquire the strata title units of Lippo Mall Puri for about 3.5 trillion rupiah (S$321 million) from a wholly owned subsidiary of Lippo Karawaci, which is LMIRT's sponsor.

Lippo Karawaci has undertaken to take up its full pro rata stake in the rights issue and apply for all the excess rights units. If it is allocated 72.5 per cent or more of the excess rights, LMIRT will effectively become a subsidiary of the sponsor. The rest of the acquisition cost will be paid through debt financing of up to $120 million. It said the impact of the pandemic presents an opportunity to acquire a quality asset with long-term capital appreciation potential at a substantially reduced price.

The manager believes the mall will continue to maintain occupancy levels and draw tenants as businesses gradually recover.

Lippo Mall units closed 6.14 per cent down at 10.7 cents yesterday.

THE BUSINESS TIMES