T

he country’s largest coal miner PT Bumi Resources (BUMI) said that it has put its ownership in its subsidiary, diversified miner PT Bumi Resources Minerals (BRMS), under a stock loan agreement in return of loans.

In an audited financial report submitted to the Indonesia Stock Exchange (IDX), Bumi Resources — the crown jewel of Bakrie family — revealed that last year it signed a stock loan agreement, in which the company agreed to lend its shares in BRMS to a number of parties or other party appointed by the parties.

“The parties have agreed to pay to the company the fee as stated in the agreement. The parties also agreed to pay an additional fee,” the financial report read.

Despite the loaning, any rights and obligations attached to the shares remain in possession and control of Bumi Resources and will never be transferred.

Given the arrangement, Bumi Resources remains the 87.09 percent owner of BRMS. According to the financial report, the ownership numbers are based on the record and confirmations of a number of parties, which are securities administration bureau PT Sinartama Gunita with 50.55 percent and PT Long Haul Indonesia with 12.8 percent. Several parties hold about 5 percent each to a combined 23.74 percent shares in BRMS. The financial report did not specify the parties that borrowed less than 5 percent shares in BRMS.

The report disclosed nothing about PT DMS Investama, which according to Sinartama Gunita filing on March 26, holds 7.03 percent in BRMS.

“The agreement is for a period of 12 months from the signing and can be extended with the written consent of both parties,” Bumi Resources outlined in the financial report without detailing the exact date of the agreement.

The company did not disclose how much the fee was to transfer the lent BRMS shares or what it would be used for.

Bumi Resources director and corporate secretary Dileep Srivastava had not replied to The Jakarta Post’s questions before this article was sent to press.

Capital market observer Yanuar Rizky said that the stock loan agreement might have been made for cash flow reasons.

“Bumi Resources probably needs liquidity for itself or for BRMS. The company might have faced difficulty in raising funds due to its mounting debts. That’s why it lent the shares,” Yanuar said.

Bumi Resources’ total liabilities reached US$6.92 billion while equity was only $392 million as of the end of 2012. It reported a net loss of $666.21 million for the 2012 financial year.

Yanuar suggested that the parties involved in the stock loan agreement were affiliated with Bumi Resources as the company stated that it remains in control over BRMS. Moreover, he said, a deal with an affiliated party wouldn’t put the company at risk of default or transfer of ownership if it failed to pay money paid under the agreement.

Bumi Resources is currently 29.2 percent owned by London listed Bumi plc. The majority owners of Bumi plc are Indonesian shareholders, which are Jakarta listed PT Bakrie & Brothers and its related entity Long Haul Holdings Indonesia Limited — collectively called Bakrie Group — with an indirect stake of 23.8 percent.

There is no exact record on the affiliation of Long Haul Indonesia and Long Haul Holdings. Bakrie Group senior vice president Christopher Fong could not be reached for comment, but previously said that he couldn’t confirm any affiliation between the two.

Yanuar said that any move to put shares of subsidiary under agreement — such as the stock loan agreement — had to be referred to the company’s deed of establishment or approval of shareholders in an extraordinary meeting.

In an extraordinary meeting in May 2012, Bumi Resources obtained approval from shareholders, among others, about its plan to pledge; or put up as collateral; or encumber with security interest; or assign a major portion or all; shares owned and controlled by the company in the subsidiaries.