This article first appeared in The Edge Financial Daily on September 14, 2018

KUALA LUMPUR: Axiata Group Bhd’s 66.4%-owned Indonesian listed outfit, PT XL Axiata Tbk, has proposed to raise up to five trillion rupiah (RM1.5 billion) through the establishment of a shelf bond and sukuk ijarah programme.

In a filing with Bursa Malaysia yesterday, Axiata said the programme consists of five series with each principal amount of up to one trillion rupiah.

The group said the bonds and sukuk will be issued via a shelf registration public offering through a book-building process and have been assigned a rating of AAA (idn) — (Triple A) by PT Fitch Ratings Indonesia.

Assuming the maximum amount of five trillion rupiah nominal value of sukuk is issued by the end of this year, Axiata said its consolidated gearing would increase from 0.63 times to 0.67 times.

The group said the proceeds after deducting issuance costs, will be used fully for capital expenditure to increase XL Axiata’s capacity, expand its network, and improve service quality. “The capital expenditure includes but not limited to the purchase of Base Station Subsystem  and/or purchase of fibre-optic transmission.”

Axiata said PT CGS-CIMB Sekuritas Indonesia, PT Mandiri Sekuritas, PT Indo Premier Sekuritas, PT Maybank Kim Eng Sekuritas and PT DBS Vickers Sekuritas Indonesia were appointed the joint lead underwriters for the proposed bonds and sukuk.

Axiata said the fund raising is not subject to shareholders’ approval, and XL Axiata has obtained a pre-effective statement from Indonesia’s Financial Services Authority for the commencement of book-building.