This article first appeared in The Edge Financial Daily, on May 10, 2016.

KUALA LUMPUR: PT XL Axiata Tbk, a 66.4%-owned subsidiary of Axiata Group Bhd, announced yesterday it is pricing its 100-for-25 rights issue at 3,150 rupiah (RM0.95) per share, the proceeds from which will be used to fully repay the US$500 million (RM2.01 billion) loan from the parent company.

The repayment of the debt will also reduce the company’s debt to an equity ratio from 1.8 times as of March 31, 2016 to 0.9 times pro forma for the rights issuance, according to a statement from XL Axiata.

XL Axiata intends to issue 2.75 billion new shares, which will see it raise as much as 8.7 trillion rupiah. Anyone already holding 100 shares by May 18 will be given the rights to purchase 25 new shares at the issue price of 3,150 rupiah.

The pricing for the cash call is pursuant to the effective letter it received from the Financial Service Authority approving the company’s fully underwritten rights issuance, said XL Axiata.

“This is a key milestone which received overwhelming shareholders’ approval at the extraordinary general meeting on March 10, 2016, and thus places XL Axiata’s balance sheet management initiative well on track to fully repay the US$500 million shareholder loan,” said XL Axiata chief financial officer Mohamed Adlan.

Axiata Group has already expressed its intention to fully subscribe for its pro-rata rights entitlement under the rights issue, the statement added.

Credit Suisse (Singapore) Ltd and PT Mandiri Sekuritas are acting as standby purchasers, which will take up any remaining unsubscribed shares in this fully underwritten rights issuance.

XL Axiata ended trading hours yesterday at 3,480 rupiah, down 1.14%. Axiata Group , meanwhile, closed nine sen or 1.64% lower at RM5.40, with a market capitalisation of RM48.26 billion.