PT Bakrie & Brothers, controlled by Indonesian billionaire Aburizal Bakrie, said it agreed to sell part of its stake in coal producer Bumi Plc to PT Borneo Lumbung Energi & Metal for $1 billion in cash to help pay a loan.
The sale proceeds will be used to help pay $1.35 billion in debts owed to Credit Suisse Group AG, Chief Executive Officer Bobby Gafur told reporters in Jakarta today. The borrowings, including a $597 million loan, will be due in March, Bakrie & Brothers Chief Financial Officer Eddy Soeparno said by telephone.
Bakrie & Brothers, whose stock has slumped 24 percent in the past six months, has been in negotiations to restructure the $597 million loan earlier this year and said Oct. 7 the debt wasn’t in default. Borneo plans to purchase a 23.8 percent stake in Bumi, partly owned by Nathaniel Rothschild, to access coal mines in Indonesia supplying China, the fuel’s biggest buyer.
“It’s a big and meaningful amount for the Bakrie family,” Erindra Krisnawan, an equity analyst at CIMB Securities SDN BHP in Kuala Lumpur, said by phone. “Bumi on a standalone basis is a very good asset and they have a lot of resources. They have a very good location, cost advantages.”
Borneo said it will use a $1 billion loan from Standard Chartered Bank Plc for the purchase, according to an e-mailed statement today. The bank is also Borneo’s financial adviser.
As collateral for the five-year loan, Borneo pledged holdings in Bumi and its units, including a stake in coking-coal mining unit PT Asmin Koalindo Tuhup, Borneo President Director Samin Tan told reporters in Jakarta.
Borneo fell 16 percent to 870 rupiah in Jakarta trading, while Bakrie & Brothers was unchanged at 52 rupiah.
Bakrie & Brothers received offers from Glencore International Plc and others to help refinance the loan, Bumi co-Chairman Rothschild said last month. The Indonesian palm-oil- to-property family empire founded in 1942 currently owns a 47.6 percent stake in Bumi, Gafur said today. PT Bukit Mutiara and Rothschild hold the rest.
Bumi has the largest coal-producing asset in Indonesia, accounting for about 22 percent of the nation’s total output last year, according to its website. Borneo has an agreement to sell coking coal to South Korea’s Posco, the world’s third- largest steelmaker by output.
“The strategic partnership with Borneo will complete Bakrie’s investment portfolio in the coal sector with addition of coking-coal assets under Borneo,” Bakrie CEO Gafur said.
Completion of Deal
Bakrie & Brothers expects to complete the transaction by the end of December, and there’s no option for a share buyback in the deal, according to Gafur.
Bumi, which suspended its $2.1 billion takeover of PT Bumi Resources Minerals last month, reported underlying profit of $54 million in the first half, driven by record thermal-coal prices.
China’s thermal coal prices rose to a three-year high last month as power stations and central-heating plants built up stocks for winter. Demand for coal increased 10.3 percent in the first three quarters from a year earlier, the National Development and Reform Commission, the country’s top economic planner, said Oct. 21.
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