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ndonesia'€™s largest coal miner, PT Bumi Resources, announced on Friday that it had sold 50 percent of its shares in subsidiary PT Fajar Bumi Sakti (FBS) to reduce its US$130 million debt.

The company, part of the Bakrie Group, had signed a Conditional Sale and Purchase Agreement (CSPA) with Jainson Holding Hong Kong Limited to divest its stake in FBS, Bumi corporate secretary Dileep Srivastava said in a press statement.

Bumi controlled FBS, a thermal coal company, through its special purpose entities, Bumi Resources Investment and Leap Forward Resources Limited.

According to its website, FBS was established in 1978 with mining and general trading as its main scope of activities. The company has a mining concession in Loa Ulung, Tenggarong in East Kalimantan, which covers a 988 hectare area with proven reserves of about 14 million tons.

In 2006 and 2007, FBS acquired two other concessions covering 4,008 hectares and 4,995 hectares, respectively, in two villages in Tabang, East Kalimantan. The estimated reserves in the Tabang area are approximately 100 million tons.

Srivastava said the conditional agreement stipulated six months to complete the transaction, which would involve final due diligence and obtaining legal approval.

After completing the transaction, the proceeds from the shares sale were expected to further reduce the company'€™s debt by $130 billion to the respective secured lender, Srivastava said. '€œThis follows the company'€™s previous debt restructuring and the recently concluded rights issue,'€ he said.

Srivastava added that the action was an integral part of the company'€™s announced objective to strengthen its financials by decreasing debts and returning interest costs to sustainable levels amid weak sentiment and falling coal prices.

Bumi expected to produce up to 90 million tons of coal this year, up from 80 million tons last year, and was capable of producing up to 100 million tons next year, Srivastava previously said.

It also booked a $168 million net profit in the first half of this year, in contrast to a $248.6 million net loss in the same period last year.

As of June, Bumi'€™s loans amounted to $4.1 billion. Bumi'€™s debts that mature this year include $337 million from Country Forest Limited, $117.5 million from Credit Suisse, and $54 million from Deutsche Bank.

'€œWe are fundamentally and operationally strong. Our problem is the high level of debt and high interest costs. This is what the company is focusing on, reducing our debt from $4 billion to about $2.5 billion by the end of next year and bringing it down further at the rate of $2 billion thereafter,'€ Dileep said last month.

In October, Bumi'€™s management said it was mulling other options to pay its maturing debts after the company failed to collect $275 million from a rights shares offering that was undersubscribed.

'€” JP/Grace D. Amianti