PT Bumi Resources said it will continue to “engage proactively” with bondholders over coming weeks after a meeting to delay repayment on $375 million of convertible notes failed.
The Indonesian coal miner held a bondholders’ meeting in Singapore June 20 to approve the extension but “did not achieve the requisite quorum to consider the extraordinary resolution and accordingly the proposal has not been approved,” according to a company statement that day. The 9.25 percent notes mature Aug. 5, Bloomberg-compiled data show.
Jakarta-based Bumi missed a coupon payment on the notes June 5 and has warned it’s “highly likely” to default without forbearance from debtholders, according to a June 5 memorandum. Bumi has since paid the June coupon and is “up to date” on its obligations, Company Director Dileep Srivastava said today.
“We continue to engage proactively with concerned stakeholders and hope to reach closure in August,” Srivastava said by e-mail. “Debt servicing is not an issue.” He declined to say when the next meeting will be, or if Bumi will offer better terms to win the support of noteholders.
The Bakrie group, which part-owns Bumi Resources, is seeking to avert a third default in 16 months as coal prices extend a two-year slump and rising interest rates dent profits. PT Bakrie Telecom and PT Bakrieland Development have missed payments on $535 million of dollar bonds since the start of 2013, Bloomberg-compiled data show.
The convertible notes fell 0.15 cents to 38.696 cents on the dollar as of 6:00 p.m. in Hong Kong, Bloomberg-compiled prices show. The company’s $700 million of 10.75 percent October 2017 bonds declined 0.29 cents to 50.129 cents, the least in a more than a week. Bumi’s stock tumbled 14.4 percent to 131 rupiah ($0.01), the lowest since August 2003.
As well as extending the convertible notes’ maturity, other amendments the country’s largest thermal-coal producer is seeking include reducing the bonds’ annual coupon to 7 percent and changing the conversion price to 750 rupiah from 3,366.9 rupiah, according to the June 5 memo.
Bumi averted a default on June 11 on $300 million of other U.S. dollar-denominated bonds, while banks including Credit Suisse Group AG and China Development Bank Corp. consented to a separate refinancing to ease $4.7 billion of short-term liabilities.
Bumi is also seeking approval for a rights issue and will hold an extraordinary general meeting of shareholders on June 30 in relation to that, Srivastava said. That plan entails selling as many as 26.17 billion of new shares to repay $1.3 billion to China Investment Corp., Bumi said last month.
“We will proceed with the rights issue approval in our June 30 extraordinary general meeting, engage with paperholders and keep trying to reduce debt and extend maturities as optimal,” Srivastava said in a June 20 e-mail.
“Fundamentally we continue to be unmatched, with production and sales capability of 90 million tons this year,” he said. “When sector sentiment improves, we are ready for the next boom.”
The Bakrie group owns 29.2 percent of Bumi Resources, according to the June 5 memo to bondholders.