Lippo Karawaci gets pre-funding of $377m for rights subscription

SINGAPORE -Indonesian real estate developer Lippo Karawaci has received US$280 million ($377 million) in advance subscription payment for part of the entitlements to a US$730 million rights issue, said the sponsor for Singapore-listed First Real Estate Investment Trust and Lippo Malls Indonesia Retail Trust on Thursday (March 21).

PT Inti Anugerah Pratama (IAP) - a shareholder of Lippo Karawaci - and IAP's wholly owned subsidiary have pumped in the sum as advance subscription payment for Lippo Karawaci's rights at an exercise price of 235 rupiah per share, with the pre-funded amount in cash being non-interest bearing and non-refundable.

Lippo Karawaci's chief executive officer John Riady, who was appointed recently, said: "The completion of the advanced subscription marks an important first step of the funding programme, and only strengthens our commitment to LPKR's (Lippo Karawaci) strategic transformation. The proceeds will be used to jump-start the right-sizing of our balance sheet by meeting our near-term financial obligations."

Lippo Karawaci intends to apply the proceeds from the rights issue to pare debt, according to an earlier story.

The rights issue, slated for completion in the first half of 2019, is subject to shareholders' approval at an upcoming annual general meeting on April 18, as well as the necessary regulatory approvals.

Standard & Poor's (S&P) said last week that it could raise its rating on Lippo Karawaci by "one or two notches" on expected improvement in liquidity after the company completes the proposed rights issue.

Moody's Investors Service had also changed Lippo Karawaci's outlook to "stable" from "negative", on the back of improved liquidity from its rights issue. It affirmed the listed company's B3 corporate family rating, which also applies to senior-unsecured bonds issued by Lippo Karawaci's wholly owned subsidiary Theta Capital. The bonds are guaranteed by Lippo Karawaci and some of its subsidiaries.