UP AND DOWN: PT Bakrie & Brothers president director Nalinkant A. Rathod holds up a printout of the company’s performance, during a public exposure in Jakarta on Monday of the company’s troubled subsidiary PT Bumi Resources. (JP/Ricky Yudhistira)

Publicly listed investment firm PT Bakrie & Brothers, the flagship of the influential Bakrie family, said Monday its recent deal to sell a stake in its coal company was still mired in uncertainty and could still fail.

In its statement to the Indonesia Stock Exchange (IDX) Monday, Bakrie & Brothers said the deal to sell 35 percent of its stake in PT Bumi Resources to Northstar Pacific could come up empty if Bumi’s share price kept declining.

Bakrie said it believed the lifting of the trading suspension in Bumi shares would ignite force selling that would undermine the price of Bumi’s shares, especially those currently pledged as collateral for loans.

Bakrie borrowed $1.39 billion and Rp 560.8 billion (US$48 million) between April and October by putting up stakes in Bumi and other companies as collateral. However, during the Oct. 6 stock market rout, the value of the collateral plunged.

This has forced Bakrie to either inject cash to maintain the collateral value and speed up the debt payment, or risk the stake being seized at a value deemed disadvantageous to Bakrie in connection with a collateralized debt-raising scheme.

Bakrie & Brothers also announced it had defaulted Rp 134.9 billion to Recapital Securities and Rp 10 billion to PT Aldira as a result of the repo financing scheme. The firm had put up shares in Bumi and PT Bakrie Sumatera Plantations for these two deals.

During a press conference Monday, Bakrie & Brothers president director Nalinkant A. Rathod said the company was renegotiating the loans after the stock slump led some creditors to sell pledged shares.

“We have to renegotiate because some have exercised the right to sell the pledged shares, while a fairly decent amount of people are patient enough (to wait for Bakrie to pay off the debt),” Rathod said.

The sale of pledged shares may mean Bakrie & Brothers, controlled by the politically wired family of Coordinating Minister for the People’s Welfare Aburizal Bakrie, now owns less than 35 percent of Bumi.

A conditional agreement to sell the Bumi stake for $1.3 billion to Northstar Pacific, the local arm of U.S. buyout firm Texas Pacific Group Inc. (TPG), may be canceled if Bakrie fails to provide the 35 percent stake.

As reported earlier, Bakrie has put up part of the 35 percent stake as collateral in the repurchasing agreement scheme.

“Our deal may fail if we can’t provide the promised shares to Northstar,” said Bakrie & Brothers vice president Dian Adhitama.

“The suspension lifting has made it difficult to recollect the shares from repo (repurchasing) creditors, because they are planning to sell the shares in the market,” she said.

The trading suspension in Bumi shares has been the subject of a political struggle between Finance Minister Sri Mulyani Indrawati and President Susilo Bambang Yudhoyono, who is heavily indebted to the Bakries for financing his presidential campaign in 2004.

Mulyani has even reportedly threatened to resign if Yudhoyono keeps protecting the Bakries.

The IDX resumed trading in Bumi shares on Nov. 6, only to see the share price lose almost half its value.

Bumi shares slid 9.5 percent to Rp 1,050 on Monday. (hwa)

Popular

Govt eyes September for mass relocation of civil servants to Nusantara

Govt claims 'mudik' 2024 traffic management a success

Public hopes swell ahead of election dispute ruling