T

he Bakrie Group’s so-called reverse takeover deal with the United Kingdom’s Vallar could ease the group’s road to refinance its coal unit’s US$4.2 billion debts, says Indra Bakrie, proposed chairman of the new UK-based Indonesian coal company.

Indra, who was interviewed by Bloomberg in London on Friday, said that being in London would allow the company to refinance its debts with lower interest rates, which could free up cash flow to invest in expansion.

“The reason to be in London is also that it’s going to be a lot easier for Bumi to start growing organically,” Indra said.

British investment firm Vallar announced on Nov. 16 a deal with two Indonesian coal giants, Bumi Resources and Berau Coal Energy, which involves a $3 billion cash and share swap for a 25 percent stake in Indonesia’s largest coal producer (Bumi) and 75 percent stake in the country’s fifth largest coal producer (Berau).

Upon completion of the transaction, the Bakrie Group will own a controlling 43 percent stake in Vallar, which will later be named Bumi Plc, allowing for a “backdoor” listing which, in the words of Vallar co-founder Nathaniel Rothschild, will make it the “first Indonesian company to list its shares on the London stock exchange”.

The UK equity market is home to mining stocks with a total market value of more than $250 billion.

Bumi’s debts declined to $3.81 billion from the previous $4.17 billion following a rights offer that raised nearly $360 million at the end of September this year.

The debts consist of $3.06 billion in bank loans, $591.8 million in convertible bonds and the remaining $158 million in other loans, Bisnis Indonesia reported.

Despite the promising outlook on debts as seen by Indra, analysts at Moody’s Investors Service Singapore said that the recent corporate action would not have immediate impacts on the coal giants’ debt rating.

“Moody’s notes that the broad wording of the “change of control” language in Bumi Resources’s bond documents seems to preclude a change of control event from arising on this occasion, as Bakrie Group affiliates will retain control of Bumi Resources by way of their interest in Vallar ... [and] therefore expects no impact on Bumi Resources arising from these transactions,” the rating agency said in a statement released on Friday.

Moody rates Bumi Ba3 with a negative outlook, while Berau’s rating is BB with a stable outlook.

The Indonesia Stock Exchange (IDX) shared the same view, with director of corporate listings Eddy Sugito seeing no significant changes caused by the deal with Vallar, which is expected to be finalized on Apr. 8, 2011.

With the new entity, Bumi and Berau are expected to almost double their coal output to 140 million tons per year by 2013, from the current combined capacity of 78 million tons per year.

Indonesia is the world’s largest thermal coal exporter.

Vallar’s shares, which were suspended from trading on the London stock exchange since Tuesday’s deal announcement until Thursday, gained 2.63 percent on Friday’s trading at 975 pence per share as of 2 p.m. London time.

On Friday’s closing, Bumi’s shares were traded at the highest level since Jan. 14 at Rp 2,850 apiece. Shares in Berau were up by nearly 2 percent on Friday, closing at Rp 530 per share, the highest since its August initial public offering (IPO). (est)