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Barito Pacific to raise $1 billion for the acquisition of Star Energy in Indonesia

Wayang Windu Unit II, West Java, Indonesia (source: Aecom)
Alexander Richter 15 Dec 2017

Indonesian petrochemical group Barito Pacific is raising $1 billion in a share issue on the stock exchange for the acquisition of Star Energy Group Holdings, following the signing of a conditional sale purchase agreement this week.

We previously reported, on the intent of petrochemical group Barito Pacific to buy a two-thirds share in Star Energy Group Holdings, the process has now progressed.

Star Energy now has signed a conditional sale purchase agreement with Barito Pacific earlier this week.

As a result, Barito Pacific has announced issuing new shares in the first quarter of 2018 to raise up to $1 billion, which the company will use to buy the 66.67% of the shares of Star Energy Group Holdings Pte Ltd. from Mr. Prajogo Pangestu.

  1. Limited Public Offering through the Capital Increase with Pre-Emptive Rights (“PreEmptive Rights”) of the maximum amount of 5,600,000,000 new shares of the Company with the nominal value of Rp 500 per share (“New Shares”) or 40.12% from issued and fully paid shares in the Company (“Proposed LPO II”); and
  2. Acquisition of 66.67% shares of Star Energy Group Holdings Pte Ltd (“SEGHPL”) from Mr. Prajogo Pangestu (“PP”) (“Proposed Acquisition”).

In order to establish a foothold in renewable and resource oriented industrial sectors that have growth from upstream to downstream by diversifying and integrating into the resource industry for future developments, particularly in the renewable energy sector, Barito Pacific intends to acquire SEGHPL engaged in renewable energy.

SEGHPL has subsidiaries that own business activities in the renewable energy and has several important contracts, including: (i) Joint Operation Contract (“JOC”) and Energy Sales Contract (“ESC”) for the Wayang Windu Project, respectively, between PT PLN (Persero) and PT Pertamina Geothermal Energy and Star Energy Geothermal (Wayang Windu) Ltd. (“SEGWW”); (ii) JOC and ESC Joint Operation Contracts for the Salak Project, respectively, between PT Pertamina Geothermal Energy, SEGSPL and SEGSL, (iii) JOC for Darajat Projects made between PT Pertamina Geothermal Energy, SEGDI, SEGDII and (iv) ESC for Darajat Projects made between PT Pertamina Geothermal Energy, SEGDI, SEGDII and DGI.

With the acquisition of SEGHPL, it is expected that the Company’s investment portfolio will increase and in turn can increase value added for all shareholders of the Company.

Estimation of the use of proceeds funds from the Proposed LPO II after deducting share issuance costs are as follows:

  1. About 52% will be used to settle the remaining purchase price in connection with the Proposed Acquisition through the issuance of shares of the Company exercised by PP (transactions inbreng);
  2. About 24% will be used to pay the Company’s financial liabilities; and
  3. The remaining funds will be used for: (i) The Company and its subsidiaries’ working capital; (ii) Business development of the Company and its subsidiaries; (iii) Future company acquisition. In the case that the Company will have an acquisition in the future, then the Company will always fullfill to capital market regulations applicable at the time of transaction.

For further details on the share issue by Barito Pacific, also sharing details on the current capital structure of Star Energy, see the link to the Barito Pacific announcement below.

Source: Barito PacificThe Jakarta Post