Bumi Resources Braces for Default Verdict as Deadline Passes

PT Bumi Resources will say on Friday whether bondholders are letting it repay $375 million of notes within seven years instead of seven weeks.

A deadline for holders of the Indonesian coal miner’s 9.25 percent convertible bonds to agree amendments to the debt or let the company default passed at 11:59 a.m. Singapore time today, according to a memorandum. The result will be known after a bondholders meeting on June 20, Jeremy Hughes, a Singapore-based spokesman at consent agent Deutsche Bank AG, said in an e-mailed reply to questions. The resolution requires support from at least three-quarters of votes cast at the meeting.

“Bumi probably has some leverage to push this restructuring through because what’s the alternative?” Todd Showalter, an analyst at PT Samuel Sekuritas Indonesia, said by phone June 16. “I’m quite sure the terms are going to be changed because Bumi Resources has no way of making the payment under the current terms.”

The restructure is part of Bumi’s survival plan after coal prices fell to the lowest level since 2009. The company averted a default on June 11 on $300 million of notes, while banks including Credit Suisse Group AG and China Development Bank Corp. consented to a separate refinancing to ease its $4.7 billion of short-term liabilities.

Prices Plunge

The notes fell 0.53 cents to 37.988 cents on the dollar as of 2:36 p.m. in Hong Kong. They have declined 37 percent this year, while the stock slumped 38 percent in Jakarta over the same period.

The Jakarta-based company, part owned by Indonesia’s Bakrie family, is seeking to extend the bond’s maturity to July 2021, reduce the annual coupon to 7 percent and change the conversion terms, among other amendments, the bond document shows.

Bumi said last week it was “highly likely” to miss payment on the notes in August if holders don’t agree to the proposal, citing weaker commodity prices. Indonesia’s benchmark coal prices have dropped 8.3 percent this year, extending a two-year slump to the lowest level since 2009.

Before it's here, it's on the Bloomberg Terminal.