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Bakrie struggles to attract buyers, salvage business empire
Publicly listed PT Bakrie & Brothers, the flagship of the politically wired Bakrie family, is still struggling to strike a deal to sell stakes in its most valuable firm PT Bumi Resources in a bid to salvage the family's business empire
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Publicly listed PT Bakrie & Brothers, the flagship of the politically wired Bakrie family, is still struggling to strike a deal to sell stakes in its most valuable firm PT Bumi Resources in a bid to salvage the family's business empire.
In its statement to the Indonesia Stock Exchange (IDX) on Monday, Bakrie & Brothers said it was now in the negotiation stage of a conditional sale and purchase agreement (CSPA) with buyers from Australia, India, Malaysia and the Philippines.
It is also in talks with Indonesian private and state-run companies.
Bakrie may wrap up the deal to sell the Bumi stake within seven to 10 days after Monday's announcement, according to the company.
"The negotiation process requires a relatively longer timeframe compared with the company's negotiations with buyers for other assets," Bakrie said in the statement.
The company posited more time was needed because the negotiation was not merely addressing prices and transaction structure, but also coal supply.
Bakrie said suspension of trading on Bumi shares ought to be extended and maintained until a deal is reached, else potential buyers may leave the table.
IDX has suspended trading on Bumi, as well as on energy company PT Energi Mega Persada since Oct. 7.
Three state mining firms -- PT Tambang Batubara Bukit Asam, PT Aneka Tambang and PT Timah -- are teaming up to secure a stake in Bumi after State Minister for State Enterprises Sofyan Djalil gave the nod to salvage the Bakrie family business empire.
Bakrie's 35 percent stake in Bumi is valued at US$1.4 billion based on Bumi's last-traded share price; its 40 percent stake in Energi Mega is valued at $205 million.
Bakrie needs to sell its assets to help accelerate paying off US$1.2 billion of debt after shares of Bumi and other Bakrie Group firms, pledged as collateral for $1.43 billion in loans, slumped during the stock market havoc early this month.
While the flagship remains deliberately vague about the reason for the early payment, there are widespread reports the company is in dire need of cash to help prevent the pledged shares from losing their value as a result of the global financial meltdown.
The value of the pledged shares was initially estimated at $6 billion, before plunging to $1.35 billion on Oct. 6, with creditors demanding Bakrie top up the covenant to assure the stake value would remain intact, or risk being seized.
Bakrie on Friday raised $56 million selling stakes in PT Bakrieland Development and PT Bakrie Sumatera Plantations.
A failure by the family, which is headed by Coordinating Minister for People's Welfare Aburizal Bakrie, to secure immediate funding means it could risk losing the ownership of its jeweled crown of companies.
Meanwhile, the IDX suspended trading during the intraday Monday in PT Bakrie Sumatera Plantations, PT Bakrieland Development and PT Bakrie Telecom after they took a heavy beating from investors who remained worried about the group's prospect.
Bakrie Sumatera dropped 9.64 percent to Rp 375, while Bakrieland plunged by 9.63 percent to Rp 122, and Bakrie Telecom dipped by 9.58 percent to Rp 151.
A previous plunge in the three companies' values had likewise forced the IDX to suspend trading in their shares Friday, just reopened after being suspended since Oct. 7.
