Feb 21, 2011

Multistrada considers rights issue

PT Multistrada Arah Sarana Tbk (MASA), Indonesia’s tire producer, plans to hold right issue merely to increase its working capital as much as US$50 million-US$100 million to establish a new subsidiary focusing on the management of industrial plantation.
Multistrada requires the factory of such industrial plantation with the production capacity of 5,000 tons. However, the company will choose the type of financing either from rights issue, banking loan and internal source. The company plans to develop a factory in Sumatra, Central Tapanuli, Kalimantan, and Sulawesi.
President Director of Multistrada Pieter Tanuri said that the 2011’s capex as much as US$160 million excluded the financing of the business expansion in Central Tapanuli. “
"Thus, Multistrada plans to hold a right issue and conduct cooperation with the banking institution,” he said after the extraordinary meeting of shareholders yesterday.
The option to conduct right issue shall be used to back the financing as it must earn the approval of all the shareholders in the extraordinary general meeting of shareholders (EGM) in April 2011.
“The Director will unveil all the company’s needs and all the decision depends on the EGM,” he explained without detailing out the source of funds.
Pieter said that Multisrada estimates to acquire at least 30,000 hectares of rubber plantation area from local farmers. Such acquisition will be completed at least in the first half of 2011.
Multistrada shall use the new name, yet, he declined to mention it. “One thing for sure, it will relate to Agro,” he said.
Multistrada expects such expansion to fulfill annual needs of rubber as much as 24,000 tons for the tire production in 2011 within the target of tire production realization reaching 8 million.
Multistrada’s need over rubber soared by 100% from 2010 that only amounted 12,000 tons, along with the production realization of 5.5 million tires. “Of such production needs, the company plans to directly supply the rubber from its own plantation area as much as 70% or nearly 21,000-28,000 hectare,” he said.
Such plans aims besides to cut the access of the middle man, but also to make the farmers more prosper. For example the rubber price amongst farmer only reaches Rp34,000 per kg of processed rubber, while the rubber price in Singapore has risen Rp65,00 per kg of processed rubber.
Pieter further explained that the plan to develop its business by construction raw materials factory in Central Tapanuli has earned the approval of at least 99.4% of 70% investors attending the extraordinary of general meeting (EGM).
The agenda of the EGM includes the plan to build processing factory and the additional directors.
The new directors consisted of Wayah Surya Wiroto, former Fourth Rector of Bina Nusantara and Andreas Handoyo Utama, former employee of PT Astra Daihatsu Motor. Wayah has the duty to lead the internal training centre in 10 hectares area.

Disclosure: No position at the stock mentioned above.

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