TOWR – Plans IDR9 tn rights issue

TOWR – Plans IDR9 tn rights issue Sarana Menara Nusantara (TOWR) has announced plans to conduct a rights issue, a type of capital increase that prioritizes existing shareholders. The company intends to raise up to IDR9 tn through the issuance of new shares, with the offering price to be determined later. The new shares will be listed on the Indonesia Stock Exchange and will have equal rights and privileges as previously issued shares. The capital increase will be carried out through the rights issue, following approval from the Extraordinary General Meeting of Shareholders (EGMS) on October 25, 2024. To comply with regulations, the rights issue must be completed within 12 months of EGMS approval. The proceeds, after deducting issuance costs, will be used to repay loans and fund working capital for TOWR and its subsidiary, Profesional Telekomunikasi Indonesia (Protelindo). The specific loans to be repaid will be determined later. Detailed information regarding the use of funds will be disclosed in the rights issue prospectus, which will be provided to eligible shareholders. If the rights issue does not receive EGMS approval, the plan can only be resubmitted after 12 months. (Source : Kontan) Comment : We believe TOWR's rights issue is a strategic move that will positively impact the company's long-term financial performances. By utilizing the funds to enhance cash flow and decrease debt, TOWR is demonstrating financial prudence. Given the company's strong fundamentals, the rights issue is not a sign of financial distress. BI rate cuts and the specifics of the rights issue plan will be key determinants of TOWR's share price.