Axiata ... Aug 09

PT Excelcomindo Pratama Tbk (XL) of Indonesia, which is a unit of Axiata Group Bhd (formerly known as TM International Bhd), has proposed a rights issue to raise some US$300mil to reduce borrowings and improve its capital structure.

The rights issue would consist of equity and mandatory convertible notes (MCNs).

The size of equity and the MCNs, final issue price of the common shares as well as the conversion price of MCN will be determined later.

XL’s major shareholders, including Axiata and Emirates Telecommunications Corp International Indonesia Ltd, have committed to fully subscribe to their rights entitlement.

With the proceeds to par down debts, XL will be able to reduce financing costs and improve its balance sheet to allow further investing for growth.

The Indonesian mobile operator was reported to require about RM2.1bil this year (2009) for its capital expenditure and that a rights issue was in the pipeline.

Axiata was committed to increasing the free float of XL when market conditions improved. Axiata via Indocel Holding Sdn Bhd currently owns 83.8% of XL while Emirates holds 16% and the public 0.2%.

The proposed rights issue is subject to shareholders’ approval at an EGM to be held sometime this year and is expected to be completed by the fourth quarter 2009.