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Jakarta Post

Bumi to have global restructuring after court protection

  • Anggi M. Lubis

    The Jakarta Post

  /   Thu, November 27, 2014   /  11:18 am

Following a six-month moratorium granted by a Singaporean court on legal action against their debt-payment process, Indonesia'€™s largest coal miner Bumi Resources is now entering '€œundisrupted discussions'€ with its creditors and bondholders to ensure a global restructuring of its total US$3.73 billion debts, regardless of their maturity.

Bumi finance director Andrew Christopher Beckham said that the heavily indebted firm had decided to seek court protection as, with coal prices remaining low, the company had struggled to generate enough cash to pay its debts.

Following the moratorium, Beckham said that Bumi hoped to find a solution that would treat all bondholders and creditors equally through negotiations within the given period, and that no debt repayment would be carried out during the moratorium until a global restructuring scheme was agreed.

'€œWe called in this moratorium because we can'€™t pay. The cash is not there because the price of coal is too low,'€ Beckham said, adding that no transactions to individual lenders would be made.

'€œOver the next six months we will aim to complete global restructuring, not only for the bonds but also for China Investment Corporation [CIC] and China Development Bank, including debts at any level,'€ he explained.

'€œIt won'€™t matter about maturity anymore, everyone is the same. No priority. The court has ordered that '€” it implies all lenders '€” they cannot do anything,'€ he went on.

Singapore-based Bumi Capital Pte. Ltd., Bumi Investment Pte. Ltd. and Enercoal Resources Pte. Ltd. filed an application for the six-month moratorium to the Singaporean court, which was granted earlier this week.

Bumi'€™s average selling price (ASP) '€” excluding its environment-friendly Ecocoal '€” slumped from $79.50 per ton in the first half of last year to $69.50 a ton in the same period this year amid dwindling commodity prices, piling more pressure on the company to generate cash to pay its debts and interest.

Bumi'€™s outstanding debts as of September were $3.73 billion, the largest single debt of which is to CIC, amounting to $1.04 billion.

Bumi Resources, which is affiliated with politician and tycoon Aburizal Bakrie, has been struggling to service its debt amid depressed coal prices. It has delayed a coupon payment for its $700 million notes, which was due in October, until the end of November.

The moratorium came not long after the company failed to collect $275 million from an under-subscribed rights issue offering, the proceeds of which had been planned to be used to pay up debts to several of its lenders.

Bumi also agreed last week to sell 50 percent of its shares in subsidiary Fajar Bumi Sakti (FBS), having signed a Conditional Sale and Purchase Agreement (CSPA) with Jainson Holding Hong Kong Limited to divest its stake in the respected firm.

Bumi corporate secretary Dileep Srivastava said that the company had also planned to deflate its remaining $1.04 billion debts to CIC through a share-swap mechanism, by releasing 42 percent shares of its publicly listed asset Bumi Resources Minerals, equal to $257 million.

Srivastava said that Bumi expected to have its CIC debts lowered to $630 million through the share-swap and the $150 million-worth of Bumi shares released in the previous private placement, but the transaction could only be carried out after the moratorium was concluded.

Following the moratorium, Beckham said that Bumi would focus on cutting costs to mitigate plunging coal prices to maintain its profitability.

'€œWe can'€™t do anything else, unless we are allowed to produce more coal by the government, which we would do because the margin is greater for additional coal,'€ he said.

Bumi previously said it was on track to produce up to 90 million tons of coal this year, up from 80 million tons last year, and was aiming to produce up to 100 million tons next year, subject to the government'€™s approval.

'€”JP/Anggi M. Lubis

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