PT Bakrie & Brothers, the flagship of the nation's richest and politically wired Bakrie family, announced Saturday it had sold its stake in its "bread and butter" company to a consortium led by a local subsidiary of United States buyout firm Texas Pacific Group (TPG).

Bakrie & Brothers director Ari S. Hudaya said Northstar Pacific had agreed to pay US$1.3 billion for the Bakries' 35 percent stake in publicly listed PT Bumi Resources, the world's largest thermal coal exporter, to help pay off its debts.

""We've been working hard for the past three weeks to settle the (Bakrie) debts."

"The proceeds will be used to help accelerate the debt payments," said Ari, adding the deal was signed on Friday night and Northstar would need between 21 and 28 days to verify necessary data and complete the entire transaction process.

While Ari refused to confirm whether Northstar was teaming up with state companies for the buyout, the president director of state coal producer PT Tambang Batubara Bukit Asam Batubara (PTBA), Sukrisno confirmed state firms were backing the purchase.

"We are now evaluating the proportions of our part in the consortium, but the deal between the consortium and Bakrie & Brothers had been completed," Sukrisno told The Jakarta Post on Saturday.

He said the company would soon disclose its participating interest in the consortium.

Aside from PTBA, state mining firms PT Aneka Tambang and PT Timah are also joining the Northstar-led consortium.

Northstar was set up in 2003 as a local arm of TPG, which was founded by U.S. billionaire David Bonderman. Local businessman Patrick Walujo is Northstar co-founder and co-managing director.

Aside from controlling middle sized Bank Tabungan Pensiunan Nasional, Northstar has actively invested in PT Alfa Retailindo and PT Adaro.

Ari said under the deal with Northstar, Bakrie would not demand any condition to enable it purchase back the Bumi stake within a period of time, a condition confirming that the Bakries would permanently give up their most valuable company.

With last year's sales of $2.26 billion and a net profit of $789 million, Bumi is considered as the Bakries "bread and butter".

Ari could not confirm whether he would still remain in his position as Bumi president director, with Nalinkant Rathod as president commissioner, personal factors said by market players to be complicating the negotiations.

Ari, a former Citibank Indonesia executive and Nalinkant, a former top manager at Medco Group, are the Bakries key lieutenants in running their business empire.

Bakrie & Brothers are selling the Bumi shares at a 61 percent cut from the price paid for a cross ownership transaction early this year from the Bakrie family, headed by Coordinating Minister for People's Welfare Aburizal Bakrie.

According to Bakrie & Brothers 2007 financial report, 35 percent of the Bumi stake was priced at Rp 5,432 per share or Rp 36.9 trillion ($3.69 billion) during that transaction. But the value plunged on Oct. 6 to merely Rp 14.8 trillion.

Bakrie needs to sell its assets to help accelerate paying off $1.2 billion of debt after shares of Bumi and other Bakrie Group firms, pledged as collateral, slumped during the Oct. 6 stock market slump.

While Bakrie remains deliberately vague about the reasons for the early payments, there are widespread reports the company is in dire need of cash to help prevent the pledged shares from losing their value.

The value of the pledged shares was initially estimated at $6 billion, before plunging to $1.35 billion on Oct. 6, with creditors demanding that Bakrie top up its reserves to ensure that the stake value would remain intact, or risk being seized.

Bakrie has recently raised $56 million selling stakes in PT Bakrieland Development and PT Bakrie Sumatera Plantations to help plug the deficit. (iwp)

Popular

Bali to ban production of bottled water under 1 liter

Greater Jakarta LRT breaks new ridership record

Looking beyond South Jakarta