Jakarta. Indonesia's largest petrochemical group Barito Pacific plans to issue new shares in the first quarter of next year to raise up to $1 billion which it will use to buy a majority stake in Star Energy Group Holdings, a Singapore-based utility company.
Star Energy operates three geothermal power plants in West Java, and owns other oil and gas businesses.
Indonesian tycoon Prajogo Pangestu will control both Barito Pacific and Star Energy once the rights issue is completed.
Star Energy signed a conditional sale purchase agreement with Barito Pacific on Dec. 12.
Barito Pacific plans to issue 5.6 billion new shares, equivalent to 40.12 percent of its equity, the company said in a filing to the Indonesia Stock Exchange (IDX) on Wednesday (13/12).
Shares of Barito Pacific, traded under the BRPT stock ticker, closed at Rp 2,430 (18 cents) a piece on Thursday.
The majority of the rights issue proceeds will go toward acquiring a 66.67 percent stake in Star Energy Group for $775 million. The rest will be used as working capital and for refinancing.
The pre-emptive rights issue and the acquisition plan are subject to Barito Pacific shareholders' approval at its general shareholders meeting on Jan. 22 next year.
If the shareholders pass up the opportunity to buy stakes in the rights issue, their existing shares will be diluted by a maximum of 28.63 percent.
Once it acquires Star Energy, Barito intends to focus more on its geothermal business in the near future.
Star Energy's three power plants in Wayang Windu, Derajat and Salak in West Java hava a total capacity of 875 megawatts.
The acquisition will streamline and consolidate the company's geothermal assets. In the near future, Star Energy wants to add two more geothermal assets in Lampung and Halmahera in North Maluku.
In April this year, Star Energy led a consortium with two other Southeast Asian companies to acquire two geothermal power plants worth $2.3 billion from global energy giant Chevron.
The two consortium partners are AC Energy — a unit of Philippine banking and property giant Ayala Group — and Thailand's Electricity Generating Public Company (EGCO).
Star Energy holds a 68.3 percent stake in the consortium, AC Energy controls 19.8 percent and EGCO 11.9 percent.
The consortium bought up a 370-megawatt power plant on Mount Salak in Bogor, West Java, and the 240-megawatt Darajat power plant in Garut, West Java.
Aside from Star Energy, Barito Pacific's crown jewel and its most precious business asset is Chandra Asri Petrochemical, the country's biggest petrochemical producer.
Chandra Asri produces chemicals and plastic raw materials, including butadiene and polythene, used in packaging of electronics, cosmetic products, food and beverages.