Bumi Resources Gets Moratorium Against Legal Action Post Default

PT Bumi Resources, Asia’s most-indebted coal miner, has obtained a six-month moratorium against any legal action from bondholders as it focuses on reorganizing its debt.

Bumi’s three Singapore-based units -- Bumi Capital Pte, Bumi Investment Pte and Enercoal Resources Pte -- filed a court application today under Section 210 of the Singapore Companies Act to prevent legal and enforcement action so as to facilitate discussions with noteholders.

Chris Fong, a Jakarta-based spokesman for Bumi and its units, confirmed the court filing by phone today.

The trio have some $1.375 billion of dollar-denominated bonds outstanding, according to data compiled by Bloomberg. Bumi failed to make a semi-annual coupon payment on its $700 million of October 2017 notes earlier this month following a 30-day grace period, prompting Standard & Poor’s and Moody’s Investors Service to call a default.

“We have a plan and we think it’s going to be positive,” Fong said. “Given where commodity prices are, we’re being proactive and doing the right thing to resolve the debt problem.”

Bumi Resources, Indonesia’s biggest thermal-coal exporter, is controlled by the Bakrie family and the court-obtained moratorium marks another chapter in efforts to contain the fallout in their mainstay coal business.

Coal prices have slumped more than 50 percent since the end of 2010. Bumi Resources had accumulated $7 billion of liabilities at the end of June, including $3.6 billion of debt, according to company financial reports.

The company’s 10.75 percent of $700 million 2017 debentures fell 0.2 cents to 28.40 cents on the dollar as of 6:50 p.m. in Hong Kong, according to prices compiled by Bloomberg. They’ve lost 21 percent this month and touched 27.892 cents Nov. 18, a record low.

Bumi’s 12 percent of $300 million notes due November 2016 dropped 0.123 cents to 28.432 cents, capping a 19 percent loss this month.

Bumi has informed its bondholders of the court filing and has formed a team of negotiators to discuss the situation with them, Fong said.

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