PT Bumi Resources’ bonds climbed the most in two weeks after holders of its $375 million of convertible debt approved a restructuring in a near-unanimous vote.
The Indonesian coal mining company will issue 6 percent notes due April 2018 to replace the existing 9.25 percent securities that matured Aug. 5, a plan ratified by bondholders at a meeting in Singapore on Aug. 22. The proposal was supported by investors holding more than 98 percent of the debt, director Dileep Srivastava said in an e-mail after the meeting.
Standard & Poor’s plans to upgrade Bumi’s rating after it completes the convertible debt restructuring, Singapore-based analysts Vishal Kulkarni and Xavier Jean wrote in a report Aug. 13. The ratings company cut Bumi to selective default from CC after it missed payment on the bonds.
The company’s $300 million 12 percent notes due November 2016 rose 0.35 cents on the dollar, the most since Aug. 11, to 45.915 cents as of 10:20 a.m. in Hong Kong, according to Bloomberg-compiled prices, sending the yield down to 58.671 percent. Its $700 million 10.75 percent debentures due October 2017 gained 0.01 cents on the dollar to 45.606 cents to yield 44.752 percent.
“The restructuring comes as a relief because it was seen as a big imminent hurdle,” Sandra Chow, a high-yield analyst in Singapore at CreditSights Inc., said by phone. “There could be some delayed reaction” in the note prices, she said, adding Bumi’s liquidity woes are far from over.
The green light from bondholders to restructure the convertible debt will allow Asia’s most-indebted coal miner to keep sorting out its finances, including settling loans owed to China Development Bank Corp. Bumi will also raise 8.05 trillion rupiah ($688 million) from a rights-share offering to help cut total debt, which amounted to $7 billion at the end of June.
The debt exchange represents the next step in Bumi’s plan to lower interest charges and improve liquidity in a challenging coal price and sector environment, President Director Ari Hudaya said in a stock exchange filing on Aug. 22. Completing the rights issue and other debt-for-equity swaps will strengthen its capital structure, he said.
Bumi agreed to sell a stake in its coal businesses to China Investment Corp. in July, trimming debt owed to $632 million from $1.99 billion. It still faces more workouts including interest payment on a loan from China Development Bank that was due Aug. 8, Moody’s Investors Service said in a report Aug. 13.
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