Philip Morris Narrows Range for $1.4 Billion Indonesia Offering

Philip Morris International Inc.’s Indonesian arm narrowed the price range for its rights offering, seeking $1.4 billion in 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 is offering 269.7 million shares at 65,000 rupiah to 77,000 rupiah apiece, after earlier gauging demand at a range of 63,000 rupiah to 99,000 rupiah, according to terms for the deal obtained by Bloomberg. A management roadshow for the 4-for-65 rights issue begins Monday and will run through Sept. 30, the terms show.

Philip Morris, which currently owns 98.18 percent of the Indonesian unit, will then offer 264.2 million shares from its entitlement to other investors through a placement, the terms show. The deal will help Sampoerna, which has a market value of $23.2 billion, meet Indonesian listing rules requiring companies to have at least a 7.5 percent free float by January next year.

A $1.4 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. Sampoerna will use some of the rights offering proceeds to repay working capital facilities, the terms show.

The company aims to price the sale on Oct. 1 and will begin trading ex-rights on Oct. 20, 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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