JAKARTA, March 12 (Reuters) - Indonesian property developer Lippo Karawaci said in a statement on Monday it planned to raise $1 billion in new funding through a rights issue and the sale of assets, and had also appointed John Riady as its new chief executive.
The company, which recently faced liquidity issues and an alleged bribery case, is the flagship real estate developer of the Lippo Group, operated by the billionaire Riady family. The Riady family has proposed underwriting a $730 million rights issue as part of the funding.
Lippo Karawaci said the rest of the funds will come from $280 million in proceeds from asset divestment plans, including a transfer of its Puri Mall holding to Lippo Malls.
The funds will be used for “partial repayment of debt obligations ... a liquidity buffer for interest and real estate investment trust obligations, and continued investments in existing key projects,” Lippo Karawaci said.
The rights issue will be voted on at the company’s annual general meeting of shareholders in April, with a price proposed at 235 rupiah (1.7 U.S. cents) per share.
Lippo Karawaci’s stock dropped to 246 rupiah per share following the statement, its lowest since December 2018.
The company said it had changed its management and board of commissioners, naming Lippo Group Director John Riady - grandson of the group’s founder Mochtar Riady - as its new top executive.
Lippo Karawaci was investigated by Indonesia’s anti-graft agency in October, part of a bribery probe into Lippo Group’s $21 billion Meikarta real estate project, of which the developer owns 54 percent.
A spokesperson for Lippo previously told Reuters that there was no tolerance for corruption at the company and that they were cooperating with investigators.
The property developer, also announced a cash tender offer for its dollar bonds due in 2022 and 2026 for up to a maximum amount of $150 million.
Moody’s cut the ratings of Lippo Karawaci and its dollar bonds to B3 in September, while Fitch and S&P rate them at CCC+, following recent downgrades with negative outlooks.
($1 = 14,240.0000 rupiah)
Reporting by Fanny Potkin; Editing by Tom Hogue