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Bumi gets a boost as Bapepam backs down
An investigation into acquisitions made by PT Bumi Resources could end in the coal giant’s favor, as the regulator backed down Wednesday on plans to continue the probe into allegations the deals involved affiliates
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An investigation into acquisitions made by PT Bumi Resources could end in the coal giant’s favor, as the regulator backed down Wednesday on plans to continue the probe into allegations the deals involved affiliates.
Having already cleared two of the three acquisitions as being fair, with Bumi having only to renegotiate the value of the third deal, the Stock Market and Financial Institutions Supervisory Agency (Bapepam-LK) chairman Fuad. A. Rahmany said Wednesday no further probes into the affiliation allegations would be necessary, reversing his own remarks from earlier in the day.
On Wednesday morning, Fuad had said the regulator would continue the investigation into the possible affiliation between Bumi and the acquired firms, to follow up on an audit by the Indonesian Society of Appraisers (MAPPI) that showed that in terms of pricing, two of the three deals were fair.
Fuad said such an investigation needed to reaffirm just how appropriate the transactions were.
However, in the afternoon, after a meeting with Bumi’s top management, Fuad changed his tone, saying there would be no investigation on affiliation as the prices of the acquisitions were considered fair.
Fuad made the about-face after the closed-door meeting with Nirwan Bakrie, a co-owner of Bumi, and Ari Hudaya, the Bumi president director.
Bumi is Asia’s largest thermal coal exporter and the most prized unit of PT Bakrie and Brothers, controlled by the family of Aburizal Bakrie, the coordinating welfare minister.
Earlier this year, Bapepam launched the investigation into the acquisitions of Dharma Henwa (DEWA), Fajar Bumi Sakti (FBS) and Pendopo Energi Batubara (PEB) by Bumi, because the total acquisition, valued at Rp 6.18 trillion (US$611.8 million), was deemed too expensive, while there was also widespread speculation the three companies were still affiliated with Bumi.
Pendopo is reportedly listed as being 90 percent owned by PT Bakrie Capital Indonesia, while the Fajar president director was a former analyst at Bumi and its coal-producing subsidiaries.
Bakrie & Brothers president director Nalinkant Rathod is listed as Fajar’s president commissioner.
Bapepam assigned the MAPPI team two months ago to audit the deals, resulting in the conclusion two deals were fair, while the third — for Fajar — was overpriced by Rp 370 billion.
Fuad’s remarks, however, could likely spell an end to the five-month investigation, with Bumi emerging largely unscathed and having only to renegotiate the value of the Fajar acquisition.
Bumi has always denied any wrongdoing.
