PT Summarecon Agung Tbk (SMRA) plans to increase capital with pre-emptive rights (HMETD) or rights issue by issuing a maximum of 3.6 billion shares or the equivalent of 25 percent of the paid-up capital.

Summarecon will seek shareholders' approval regarding the rights issue plan at the extraordinary general meeting of shareholders (EGM) on April 1, 2021. The company will announce the rights issue price later. According to the Financial Services Authority (OJK) regulations, the implementation period is not more than 12 months after obtaining approval at the EGM.

"The rights issue is expected to strengthen the company's capital structure so that it has a positive impact on business activities, company performance, and the company's competitiveness in the property and hospitality industry in Indonesia," said Summarecon's management in a statement on Wednesday (24/2).

According to management, with the increase in performance and competitiveness, it is also hoped that it can increase its revenue and net profit. In the end, this will provide a return on investment value for all shareholders.

Also, this additional capital affects shareholders who do not exercise Preemptive Rights because it could be affected by share ownership's dilution effect.

Summarecon last held a rights issue in 2012. At that time, the company set an exercise price of Rp 1,550 per share. If the company carries out the rights issue this year, it will be its second rights issue.

The average share price of SMRA in the last 90 days was Rp768. If using this price assumption, the company's rights issue this year could be worth Rp2.7 trillion.

This year, Summarecon has budgeted a capital expenditure or capital expenditure (Capex) of Rp 500 billion. Hopefully, the company's expansion will support this year's pre-sales (marketing sales) target of around Rp3.5 trillion.