EXCL - Bags IDR4.99tn in rights issue

Axiata Investments Indonesia (AII) has exercised its rights to purchase around 660mn shares of XL Axiata (EXCL) in participation of the latter's rights issue. During right issue, EXCL managed to bag IDR4.99 tn. The stock purchase by AII was carried out on December 30 at an exercise price of IDR2,080/share, bringing to IDR1.37 in transaction value. With this transaction, AII's ownership over the company increased from 65.9% to 66.3%. EXCL has concluded its fund raising program through rights issue (HMETD) with an issuance of 2.4 bn new shares or equal to 18.3% of paid in capital with nominal price of IDR100/s. (Source : Investor Daily) Comment: We notice an improvement of EXCL's stock movement post-rights issue could be meant a signal for market's optimism for better fundamental especially on leverage stand point. Following rights-issue, EXCL is expected to be able to repay around IDR7 tn worth of debt, while maintaining its debt rating, which is imperative during high interest environment. The strong debt rating is important to maintain or possibly lower cost of fund, and eventually prop up its bottom line growth.