Jakarta. Listed department store chain Rimo International Letari's plan to acquire property developer Hokindo Mediatama may fall through, amid the company's unsuccessful attempts to obtain regulatory approval for a rights issuance to fund the takeover, a top executive said in a statement on Wednesday (06/01).
Rimo International Lestari has been planning to acquire Hokindo from Fajarindah Megah Perkasa, using funds from its planned Rp 7.5 trillion ($539 million) rights issuance. In doing so, Rimo would develops malls, apartments and residential blocks, mainly in Jakarta, Banten and Kalimantan.
However, the plan has been repeatedly postponed since it was first announced in June — and also trimmed down from its original expansion plan involving a larger sum of Rp 8.1 trillion — due to a lack of approval by the Financial Services Authority (OJK), which rejected the plan.
In a statement filed to the Indonesia Stock Exchange (IDX) on Wednesday, which was signed by Rimo president director Henry Purwantoro, the company said the massive acquisition plan "may be canceled should the rights issuance by Rimo International Lestari not secure [requisite approvals] from the Financial Services Authority."
The statement was in response to an IDX inquiry into the planned transaction.
Henry said the company wants to acquire Hokindo in order to tap into its "massive land bank that is spread across several strategic locations, in the hope of contributing to the company in the future."
However, it has no plans to change its business model as a retailer, he said.
Hokindo Mediatama booked a loss of some Rp 133.12 billion as of September and assets of Rp 6.5 trillion, according to a statement.
Analysts suspect the rights issuance and acquisition plan may have been a backdoor listing attempt by Hokindo, given the size of the deal and the stark difference in the nature of the businesses of the two companies, but Rimo's management has denied any affiliations between the two.