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Shareholders approve sale of shares to creditors
PT Bumi Resources shareholders approved a plan to sell new shares to creditors including China Investment Corp
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T Bumi Resources shareholders approved a plan to sell new shares to creditors including China Investment Corp., Credit Suisse Group AG and JPMorgan Chase Bank NA to help Indonesia’s largest coal miner repay debt.
Bumi will raise Rp 4.6 trillion (US$508 million) by selling 1.94 billion new shares at Rp 2,366 per share, said Dileep Srivastava, a director at Bumi. The offer, an average of the share price between April 15 and May 20, is 24 percent higher than yesterday’s close, according to Bloomberg calculations.
The coal company’s shares have slumped 21 percent this year, compared with a 16 percent gain in the Jakarta Composite index, on concerns Bumi’s outstanding debt was too high. The issue will reduce the debt-to-equity ratio to 1.42 from 2.16 as of March 31, according to the company. On June 10 Bumi said Long-term debt stood at $3.6 billion.
“We highlight the potential for CIC to come in to subscribe for the non-pre-emptive rights issue in exchange for debt retirement,” Adam Worthington, a Singapore-based analyst at Macquarie Capital Securities Pte, which has an “outperform” rating on the stock, wrote in an e-mail. “This could potentially lead to improving corporate governance.”
Jakarta-based Bumi is in talks with creditors to sell the shares in exchange for debt, the company said yesterday. The issue is expected to conclude in September rather than July as initially planned.
Bumi will boost its authorized share capital to Rp 38.75 trillion from Rp 10 trillion through the non-preemptive issue that bars participation of current shareholders, Srivastava said.
The shareholders also approved a dividend payout of 30 percent of last year’s net income, or Rp 27.68 a share, Srivastava said by email.
Bumi shares fell 0.5 percent to Rp 1,900 at the midday break in Jakarta.
Raiffeisen Zentralbank Oesterreich AG is also a potential buyer of the issue, according to a company statement yesterday. CIC, China’s sovereign wealth fund, bought $1.9 billion of debt from Bumi in September.
The coal producer, 9.79 percent-owned by PT Bakrie & Brothers, an investment company controlled by Golkar Party chairman Aburizal Bakrie, Indonesia’s fourth-richest man, is paying off debt after an acquisition spree to increase output.
Bumi became Indonesia’s largest coal producer after acquiring PT Arutmin Indonesia in 2001 and PT Kaltim Prima Coal in 2003. It announced in January last year it would buy stakes in three companies for $520 million. Bumi said the acquisitions would help it double its coal output by 2012.
Bumi will buy an 80 percent stake in the parent of mining contractor PT Darma Henwa for $222 million, Srivastava said in January.
The coal miner paid Rp 2.41 trillion for a 44 percent stake in Darma Henwa and Rp 1.3 trillion for an 84 percent stake in non-producing miner PT Pendopo Energi Batubara. The two acquisitions were announced last year.
