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Bumi Resources aims to restructure debts
Bumi Resources, the countryâs largest coal mining company, is proposing another debt-restructuring scheme to its lenders, involving converting a portion of its US$3
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Bumi Resources, the country's largest coal mining company, is proposing another debt-restructuring scheme to its lenders, involving converting a portion of its US$3.9 billion debts into 32 percent ownership of the company.
Bumi finance director Andrew Christopher Beckham said the company hoped to sign an in-principal agreement for the proposal by the fourth week of October, when a legal action moratorium granted by a Singaporean court expires.
The restructuring aims to lower the company's debt to $1.2 billion by January at the soonest, as the firm expects to take three to four months to persuade lenders and to hold a general shareholders meeting in December, according to Beckham.
The proposal, he said, included converting $1.9 billion of debt into a 32 percent stake in the company through a non-preemptive rights issue at a price more than 20 times higher than Bumi's current mooted share price of Rp 50 apiece.
The conversion would result in the dilution by around 32 percent of each current stake. Currently, the public holds a 70.57 percent stake.
'If it's done according to this proposal, share pieces will be Rp 1,100. That's why there might be more discussion [on this issue],' Beckham told reporters after a public expose held over the weekend. He added that the plan would be good for everyone and would reflect the value of the company, which is $4.6 billion.
'It depends on the equity valuation [...] and the debts will be converted at that value. [The debts] will be converted into shares and rupiah. They get 32 percent of the company with this value.'
Bumi's outstanding debts as of August stood at $3.98 billion, including $1.19 billion owed to the China Investment Corporation (CIC). Bumi, which is affiliated with politician and tycoon Aburizal Bakrie, has been struggling to service its debt amid depressed coal prices.
Beckham said the company also hoped to pool around $100 million from selling a part of its asset Fajar Bumi Sakti and would also propose to exchange a total $630 million of loans from CIC and the China Development Bank (CDB) into stakes in the company's unlisted subsidiaries.
Bumi's average selling price, excluding its Ecocoal output, lost nearly half of its value from $99.8 a ton in 2011 to $55 a ton by the first half of this year.
The scheme would, according to Beckham, leave Bumi with five-year debts of $1.2 billion, which will be split equally into Trance A and Trance B loans bearing a 6 percent annual interest to be paid each quarter and a 9 percent interest paid when the debt is due.
The company can pay the debts ahead of time if it can secure excess cash, which was possible if coal prices climbed above $60 to $70 per ton, Beckham said.
Bumi's recorded net losses attributable to owner stood at $555.74 million in the first half, a stark contrast with its net profit of $149.4 million in the corresponding period last year. The firm's revenues were down by around 41 percent year-on-year to $21.5 million in the first six months of this year.
Bumi units skipped a semi-annual coupon payment on $700 million of 10.75 percent 2017 notes in November following a 30-day grace period, prompting Standard & Poor's and Moody's Investors Service to declare a default, according to a Bloomberg report. The miner also missed an interest payment on $300 million of 12 percent 2016 securities in December.
