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2. LIMITED PUBLIC OFFERING
Type of Offering : Rights issue
Nominal Value : Rp100 One Hundred Rupiah
Exercise Price :
Rp77,000 seventy seven thousand Rupiah Conversion Ratio
: 65 sixty-five existing shares entitled to 4 four Rights
Shareholder Dilution :
5.8 five point eight percent Listing
: IDX
The capital structure and shareholder structure of the company at the time the prospectus issued is as follows:
Description Par Value of Rp 100,- pershare
Total Shares Total Nominal Value Rp
Authorized Capital 6,300,000,000
630,000,000,000
Issued and Paid Up Capital:
- PT Philip Morris Indonesia 4,303,168,205
430,316,820,500 98.18
- Public with ownership of under 5 79,831,795
7,983,179,500 1.82
Total Issued and Paid-Up Capital 4,383,000,000
438,300,000,000 100.00
Unissued Shares 1,917,000,000
191,700,000,000
If all of the offered Rights in the LPO is entirely exercised by the Companys shareholders, the pro forma composition of the Companys share capital after the LPO are as follows:
Description Par Value of Rp 100,- pershare
Total Shares Total Nominal Value Rp
Persentase Authorized Capital
6,300,000,000 630,000,000,000
Issued and Paid Up Capital:
- PT Philip Morris Indonesia 4,567,978,556
456,797,855,600 98.18
- Public with ownership of under 5 84,744,520
8,474,452,000 1.82
Total Issued and Paid-Up Capital 4,652,723,076
465,272,307,600 100.00
Unissued Shares 1,647,276,924
164,727,692,400
If PMID as the primary shareholder of the Company exercise a portion of its Rights in the LPO that is 600,640 six hundred thousand six hundred and forty Rights, the pro forma composition of the Companys share capital after the
LPO are as follows:
Description Par Value of Rp 100,- pershare
Total Shares Total Nominal Value Rp
Authorized Capital 6,300,000,000
630,000,000,000
Issued and Paid Up Capital:
- PT Philip Morris Indonesia 4,303,768,845
430,376,884,500 92.50
- Public with ownership of under 5 348,954,231
34,895,423,100 7.50
Total Issued and Paid-Up Capital 4,652,723,076
465,272,307,600 100.00
Unissued Shares 1,647,276,924
164,727,692,400
If PMID as the primary shareholder of the Company exercise a portion of its Rights in the LPO that is 600,640 six hundred thousand six hundred and forty Rights, however minority shareholders do not fully exercise their Rights in the
LPO, the pro forma composition of the Companys share capital after the LPO are as follows:
Description Par Value of Rp 100,- pershare
Total Shares Total Nominal Value Rp
Authorized Capital 6,300,000,000
630,000,000,000
Issued and Paid Up Capital:
- PT Philip Morris Indonesia 4,303,768,845
430,376,884,500 92.50
- Public with ownership of under 5 344,041,506
34,404,150,600 7.40
- New Shares form Rights Issue not excercised by the Company’s shareholders
4,912,725 491,272,500
0.10
Total Issued and Paid-Up Capital 4,652,723,076
465,272,307,600 100.00
Unissued Shares 1,647,276,924
164,727,692,400
However, this does not rule out the possibility that the shareholders are be able to exercise part of the Rights owned. More detailed information regarding Limited Public Offering can be seen in Chapter I of this Prospectus.
3. USE OF PROCEEDS
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The Company intends to use all of the proceeds that it receives from the Rights Issue of Rp20.768.676.852.000 twenty trillion seven hundred seventy six billion six hundred seventy six million eight hundred two thousand Rupiah
after the deduction of any offering expenses in relation to the Rights Issue and the Offering that are payable by the Company, for
working capital and general coroporate purposes, including repayment of the outstanding working capital facilities. If the proceeds obtaind is less that planned result of the LPO, the Compnay will use internal cash, considering the
Company still has sufficient funds to run its operations. More detailed information regarding Limited Public Offering can be seen in Chapter II of this Prospectus.
4. BUSINESS RISKS Likewise with the business activities of other companies, Company faces a variety of business risks that are influenced
by both external and internal factors that could affect the C
ompany’s performance. The Following constitutes brief information on the company’s business risks:
Risks Relating to the Company’s Business and Industry 1. The Company is dependent on the production and sale of a single category of product, and any material
deterioriation of the market condition for cigarettes may adversely affect its business and profitability. 2. Current and future adult consumertrends and preferences may reduce the demand for cigarrets or certatn types of
cigarettes which may adversely affect the perice and demand for cigarettes sold by the company, and the company may be unable to anticipate or respond adequately to changes in adult smoker preferences or demand.
3. The company’s business may be adversely affected by unfavorable changes in the excise tax regime for cigarette
products, and increases in cigarette – related taxes that have been proposed or enacted in Indonesia may
disproportionately affect the Company’s profitability. 4. The Company faces intense competition, and its failure to compete effectively could have a material adverse effect
on its profitability and results of operations. 5. The Company is dependent on the strength of its brands, and if the Company is unable to adequately protect and
promote its trademark and brand names, its reputation and competitiveposition could be materially adversely impacted.
6. The Company may not be able to procure sufficient or stable supplies of raw materials for its manufacturing process as a result of factors that affect tobacco leaf and clove production and harvesting for other reasons, and a
delayorshortage in the supply of raw materials, particularly clove, could have a material adverse effect on its business, results of operations and prospects.
7. The Company is exposed to tobacco leaf and clove price fluctuations and inflation, and the company’s margins may
be affected by higher raw material prices. 8.
The Company’s financial performance is affected by economic conditions in Indonesia. 9. The Company may be affected by changes in Government policies with respect to the cigarette industry and may
face significant govermental action aimed at increasing regulatory requirements with the goal of reducing or preventing the use of cigarette products.
10. Restrictions on advertising, promotion, marketing, packaging, labelling, and usage of cigarette products in Indonesia and other markets in which the company sells its products may reduce the demand for cigarette products and
materially and adversely affect the company’s business and result of operations. 11. The Companys business depends on the operating capacity and the continuing operations of its manufacturing
facilities and unforeseen stoppage or extended downtime at the Companys production facilities or other operational risks could adversely affect its business, results of operations and financial condition.
12. The Company’s SKT operations are labor – intensive , and an increase in real labor costs or labor disputes with its
employees may erode the Company’s profitability. 13.
The Company’s business may be impacted by seasonality of cigarette consumption and seasonality of tobacco leaf and clove prices.
14. The Company may not be able to extend in arrangements with its third-party operators and may be required to replace third
– party with its own resources or may need to re-negotiate arrangements with its third-party operators. 15.
The Company’s distribution channels are subject to logistical difficulties and the company is dependent on the reliability of its distribution channels and the distribution channels provided by third-party carriers.
16. The Company may not be able to obtain, maintain or renew all of the approvals, licenses, registrations an permits that are required for it to conduct its business.
17. The Company may face challenges to title to the land on which its manufacturing and distribution faclities and sales offices are located.
18. The Company is dependent on the quality of our title to our land properties and our ability to renew or extend these titles.
19. The Company may be subject to litigation, investigations and other regulatory proceeding, including litigation alleging adverse health and financial effects resulting from the use of its cigarette products, and could incur
substantial costs in connection with such proceedings.
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20. Product liability claims and adverse publicity in respect of the tobacco products sold by the Company could have a material adverse ef
fect on the Company’s reputation. 21. The Company may be adversely affected by the imposition and enforcement of more stringent enviromental
regulations. 22.
The Company’s production facilities or operations may face disruption from enviromental groups, non-governmental organizations and interested individuals.
23. Increases in Illicit trade of tobacco products may cause reputational damage and a decline in recorded legal sales, and maycause the Company to settle claims related to ilicit trade or to adopt costly countermeasures.
24. The Company’s insurance policies may be insufficient or the Company may experience a delay between an insured
loss occurring and being compensated by its insurers. 25.
The Company’s TPOs and suppliers may engage in unethical child labor practices or be in violation of child labor laws and other labor regulations.
26. The interests of the Company’s controlling shareholder may not align with the interests of Company’s business
andor may differ from those of its other shareholders. 27. The Company is engaged in a number of transactions with affiliated parties and the application of OJK conflict of
interest regulations may cause the Company to forego transactions that are in the Company’s best interests. 28. The Company depends on the services of its senior management team and if it is unable to attract and retain
qualified personnel or attract, recruit, train and retain suitable replacements, its business, financial condition and results of operations could be adversely afffected.
29. The Company depends on the services of its senior mangement team and if it is unable to attract and retain qualified personnel or attract, recruit, train and retain suitable replacements, its business, financial condition and results of
operations could be adversely affected. 30. The failure
of the Company’s information systems to function as intended or their penetration by outside parties with the intent to corrupt them could result in business disruption, litigation and regulatory action, and loss of revenue,
assets or personal or other sensitive data. 31. The Company is exposedd to foreign exchange rate fluctuations and potential devaluation of the Rupiah.
Risks Relating to Indonesia 1. Indonesia is located in a geologically active zone and is subject to the risk of significant geological and other natural
disasters, which could lead to social and economic instability. 2. Regional authorities may impose additional and or conflicting local restrictions, taxes and levies.
3. Political and social instability in Indonesia may affect the Company. 4. Terrorist activites in Indonesia and certain destabilizing events In Southeast Asia have led to substantial and
continuing social and economic volatility. 5. Outbreak of an infectious disease or any other serious public healh concerns in Asia Including Indonesia and
elsewhere could have a significant negative impact on the economy. 6.
Regulation of greenhouse gas emissions and climate change issues may adversely affect the Company’s operations and markets.
7. Labor activism, unrest and employment legislation in Indonesia may have a material adverse effect on the Company 8. Regional or global economic changes may have a material adverse effect on the Indonesian economy and the
Company’s business. 9. Downgrades of credit ratings of Indonesia and Indonesian companies could adversely affect the Company.
10. Judgments of a foreign cout may not be enforceable against the Company. Risk Relating to the Shares
1. Conditions in the Indonesian securities market may affect the price or liquidity of the Shares.
2. The Company’s ability to pay dividends in the future will depend upon future earnings, financial condition, cash
flows, working capital requirem,ents and capital expenditures and will be paid in Rupiah. 3. The rights of minority shareholders may be more limited than in other jurisdictions.
4. Indonesian law may operate differently from the laws of other jurisdictions with regard to the convening of, and the right of shareholders to attend and vote at, general meetings of shareholders of the Company.
5. The Company operates in a legal system in which the application of various laws and regulations may be uncertain, and through the purchase of the Shares, holders of the shares are exposed to such legal system and may find it
difficult or impossible to pursue claims relating to the shares. 6. A shareholders right to participate in future rights offerings could be limited, which would cause dilution to their
holdings. 7. Shareholders may be subject to dilution on issues of new Shares or other equity securities by the Company.
8. Exchange fluctuations may have a material adverse effect on the value of the shares and any dividend distribution.
9. Indonesian law contatins provisions that could disourage a takeover of the Company. 10. There may be less company information available, and corporate governance standards may differ, for public
companies listed on Indonesian securities markets as compared with those listed on securities markets in more developed countries.
11. Indonesia may suffer from governmental or business corruption. Further information on business risks can be seen in chapter V of this prospectus.
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5. BUSINESS STRATEGIES AND PROSPECTS
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