Indonesian coal producer Bumi Resources to raise $2b via rights to pare debt

Indonesian coal producer Bumi Resources to raise $2b via rights to pare debt

The company said it will issue up to 29.1 billion shares or equivalent to
79.5 per cent of enlarged capital, and will sell them at about Rp926 per
share. The transaction, expected to take place in 2017, is part of the
company's efforts to restructure its debt from $4.2 billion to $2.6 billion.

Bumi Resources will use the proceeds to pay off debts to China Investment
Corporation (CIC) along with other eight lenders. The creditors will absorb
all new shares issued, if shareholders are reluctant to participate,
allowing Bumi Resources' debts to be converted into shares.

"This way, the old shareholders are given the opportunity to keep their
ownership, but at a higher sum than the company's current stock price. This
is already stated in the agreement between the firm and creditors," said
finance director at Bumi Resources, Andrew Beckham, in Jakarta recently.

In the proposal, CIC would control 22.6 per cent of Bumi Resources' shares,
while 2016 bondholders would get 4.6 per cent, and 2017 bondholders would
obtain 10.6 per cent. Credit Suisse would receive 3.6 per cent, UBS 0.8 per
cent, Axis Bank 0.8 per cent, Deutsche Bank 0.7 per cent, and Raiffeisen
Bank International 1.2 per cent.

The Bakrie family-controlled firm is optimistic it can boost coal production
next year to 100 million tonne following the agreement for a
debt-restructuring scheme.

Bumi Resources, dubbed as the most indebted coal miner in Southeast Asia,
has spent half of the last decade trying to reduce the debt pile. In August,
the company sold 50 per cent of its stakes in unit Leap Forward Resources
Ltd to two investors - Smart Alliance Ltd and Oceanpro Investments - in a
$90 million deal. The transaction was mainly to repay part of the company's
debts to Axis Bank Ltd, according to corporate secretary Dileep Srivastava.

Leap Forward produces and sells coals from Tambang Buluk Seng, Tambang
Gunung Sari, and Tambang Ulung in East Kalimantan.

In June, Bumi Resources offloaded 24 per cent of its shares in Newmont
Mining Corp's Indonesian unit to Medco Energi Internasional, controlled by
Arifin Panigoro. Teaming up with Agus Projosasmito's AP Investment, Panigoro
bought a total of 82.2 per cent stakes from Bumi Resources and other
investors for Rp 34 trillion ($2.6 billion).

Bumi Resources exports coal to India, Japan, and China. The company supplies
25 per cent of its coal to the domestic market and aims to increase it to 30
per cent in the near future, considering the surging demand for coal in the
country as a result of the government's ambitious electricity procurement
programme.

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Link to Original Article:
http://www.dealstreetasia.com/stories/indonesia-bumi-resources-to-raise-2bn-
via-rights-issue-convert-debts-into-shares-60166/

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com