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Bumi Considering Asset Sale, Rights Offer to Speed Debt Payment

Bumi Considering Asset Sale, Rights Offer to Speed Debt Payment
Ari Hudaya, president director of PT Bumi Resources, right, speaks as Dileep Srivastava, director and corporate secretary, center, and Achmad Reza Widjaja, chief economist for the company, listen during a news conference in Jakarta. Photographer: Ed Wray/Bloomberg

PT Bumi Resources may sell a subsidiary and conduct a rights offer as part of a plan to accelerate debt repayment, company executives said.

Indonesia’s biggest exporter of thermal coal is considering a sale of PT Fajar Bumi Sakti, Corporate Secretary Dileep Srivastava said at a briefing in Jakarta today, after the Indonesia stock exchange directed it and PT Berau Coal Energy to hold public presentations on their finances amid a probe initiated by London-listed Bumi Plc. Bumi Resources may sell shares, President Director Ari Hudaya said at the briefing.

Bumi Plc, founded by Nathaniel Rothschild and owner of 29 percent of the Jakarta-based miner, said Sept. 24 it began investigating “potential financial and other irregularities” and hired lawyers to look into a $637 million writedown of development funds and exploration assets. Moody’s Investors Service changed its outlook on Bumi Resources to negative from stable on Sept. 25, while Standard & Poor’s cut its long-term rating by a step to BB- the next day.

Bumi Resources is still unclear about Bumi Plc's statement and has always abided by Indonesian rules, Srivastava said at the press briefing. PT Berau Coal Energy has not been informed of nor involved by Bumi Plc in an investigation of Berau Coal, its president director Rosan P. Roeslani said at a separate press conference, also in Jakarta.

Share Moves

Bumi shares fell 2.7 percent to 710 rupiah apiece at the close in Jakarta, erasing an earlier advance of as much as 5.5 percent. The stock has plunged 68 percent this year, compared with the 12 percent gain on the benchmark Jakarta Composite index. Bumi Plc advanced as much as 13 percent in London.

The investigation will focus on “extensive” development funds at Bumi Resources and an asset at PT Berau Coal Energy, another coal holding, which were marked down to zero in the accounts of Bumi Plc as of Dec. 31, Bumi Plc said. It gave no figures for the writedown at that time.

The probe is the latest turn in a dispute involving Rothschild and Indonesia’s Bakrie family since they agreed to a $3 billion deal in 2010. Relations between Rothschild and Bumi Co-Chairman Indra Bakrie soured last year after the U.K.-based financier made public a letter to then-Chief Executive Officer Ari Hudaya urging a “radical cleaning up” of Bumi Resources.

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