Philip Morris Tests Interest in $1.9 Billion Indonesia Offering

Philip Morris International Inc.’s Indonesian arm began gauging demand for an as much as $1.9 billion rights offering, part of a deal that will see the world’s largest listed tobacco company cut its stake in the local unit.

The company’s PT Hanjaya Mandala Sampoerna subsidiary began meeting fund managers Wednesday about an offering of 269.7 million shares in a 4-for-65 rights issue, according to terms for the deal obtained by Bloomberg. It plans to sell the shares at 63,000 rupiah to 99,000 rupiah apiece, with a final price range to be announced at the end of the investor education period that runs through Sept. 17.

Philip Morris, which currently owns 98.18 percent of the Indonesian unit, will then offer most or all of its entitlement to investors through a share placement, the terms show. The deal will help Sampoerna, which has a market value of $23.3 billion, meet Indonesian listing rules requiring companies to have at least a 7.5 percent free float by January next year.

A $1.9 billion deal would be the country’s largest rights offering, surpassing the $1.3 billion raised in 2011 by Indonesian lender PT Bank Mandiri, according to data compiled by Bloomberg. Philip Morris’s share sale will add to the $2.7 billion of equity offerings in Indonesia this year, the data show.

Sampoerna will use some of the rights offering proceeds to repay working capital facilities, according to the terms. The companies plan to take investor orders from Sept. 21 through Oct. 2, with pricing to be set the week of Sept. 28, the terms show.

Goldman Sachs Group Inc. and JPMorgan Chase & Co. are joint global coordinators of the offering, while Citigroup Inc., Credit Suisse Group AG and PT Mandiri Sekuritas are joint bookrunners.

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