(Kontan.co.id/Cheppy A. Muchlis)
The Bakrie Group, Indonesia’s largest conglomerate, is paying off its debt to 20 creditors grouped under Credit Suisse AG.
The group plans to sell assets in Long Haul Holding, one its companies in Nevis, in the West Indies, to pay down US$437 million in debt, kontan.co.id reported on Wednesday, quoting a source within the group.
The source said selling Long Haul Holding assets was the most reasonable option for the group at this time.
“It’s risky to get fresh funding from another creditor especially at a time like this, with [the financial crisis] in Europe,” said the source, who declined to be named, as quoted by kontan.co.id.
He said the group might sell Long Haul Holding assets in publicly listed Delta Dunia Makmur, publicly listed Benakat Petroleum Energy, publicly listed Energi Mega Persada, publicly listed Berau Coal Energy, Bumi Plc and “other assets overseas”.
No one from the Bakrie family could be reached for comment.
Publicly listed Bakrie and Brothers has borrowed $437 million from Credit Suisse, with 47.6 percent of Bumi Plc shares as collateral.
Around $194 million of the debt went to publicly listed Bakrie and Brothers, the holding company in the group, and the remaining $243 million to Long Haul.
Credit Suisse has given the Bakrie Group three options in regard to the $437 million debt: to provide another $100 million in collateral because of declining Bumi Plc share prices, to shorten the period of its debt repayment or to revoke additional collateral if Bumi Plc share prices bounce back.
Apparently, the Group has chosen the second option.
“[We will] pay off most of, or our entire, Credit Suisse borrowing,” said the source.
He said Bakrie and Brothers were eyeing three potential investors who were interested in buying assets of Long Haul, which still owns 20 percent of Bakrie and Brothers shares, hoping to be able to raise at least $1 billion from that.
The investors came from Asia, Europe and the Middle East, he said.
The holding company plans to spend the money on the planned debt repayment and expansion of its subsidiaries, such as publicly listed Bumi Resources, Energi Mega, publicly listed Bakrie Development and publicly listed Bakrie Telecom.
Bakrie and Brothers price has remained at the level of Rp 50 (0.54 US cents) per share since February, while Bumi Plc shares traded at £406.70 ($649.01) per share on the London Stock Exchange on Wednesday afternoon, a £159 decline from £565 on April 16. (nat/mtq)