Bloomberg News

Bakrie Sells Bumi Stake to Help Repay Credit Suisse Debt

November 01, 2011

(Updates to add comment from analyst in fourth paragraph.)

Nov. 1 (Bloomberg) -- PT Bakrie & Brothers TbK, controlled by Indonesia billionaire Aburizal Bakrie, agreed to sell part of its stake in coal producer Bumi Plc to PT Borneo Lumbung Energi & Metal for $1 billion in cash to help repay a loan.

The proceeds will be used by Bakrie & Brothers to pay debt owed to Credit Suisse Group AG, Bakrie Chief Executive Officer Bobby Gafur said today at a press briefing in Indonesia.

Bakrie & Brothers, whose stock has slumped 25 percent in the past six months, has been in talks to restructure the $597 million loan arranged by Credit Suisse earlier this year and said Oct. 7 the debt wasn’t in default. Buying a stake in Nathaniel Rothschild’s Bumi gives Borneo access to thermal coal mines in Indonesia that supply China, the fuel’s biggest buyer.

“It’s a big and meaningful amount for the Bakrie family,” Erindra Krisnawan, an equity analyst at CIMB Securities SDN BHP in Kualua Lumpur, said by phone. “Bumi on a standalone basis is a very good asset and they have a lot of resources, they have a very good location, cost advantages.”

Borneo’s shares fell 11 percent to 920 rupiah at 1:50 p.m. in Indonesian trading, while Bakrie & Brothers slide 1.9 percent.

Borneo will use a $1 billion loan provided by Standard Chartered Bank Plc to buy the stake, according to the statement. The bank is also acting as Borneo’s financial adviser.

Glencore Offer

Bakrie & Brothers received offers from Glencore International Plc and others to help refinance the loan, Bumi co-Chairman Rothschild said last month. Indonesia’s Bakrie Group is a palm-oil-to-property family empire founded in 1942.

China’s thermal coal prices rose to a three-year high last month as power stations and central-heating plants built up stocks for winter. Demand rose 10.3 percent in the first three quarters from a year earlier, the National Development and Reform Commission said Oct. 21. Consumption of coal for power generation rose 13 percent to 1.45 billion tons, it said.

Bumi has the largest coal-producing asset in Indonesia, accounting for about 22 percent of the nation’s total output last year, according to its website. It has an agreement to sell coking coal to South Korea’s Posco, the world’s third-largest steelmaker by output.

Bumi, which suspended its $2.1 billion takeover of PT Bumi Resources Minerals last month, reported underlying profit of $54 million in the first half, driven by record thermal coal prices. Operating profit was $62 million on sales of $478 million, the Jersey, Channel Islands-based company said in August.

--With assistance from Greg Ahlstrand in Hong Kong. Editors: Keith Gosman, Andrew Hobbs

To contact the reporters on this story: Rebecca Keenan in Hong Kong at rkeenan5@bloomberg.net; Elisabeth Behrmann in Sydney at ebehrmann1@bloomberg.net

To contact the editor responsible for this story: Andrew Hobbs at ahobbs4@bloomberg.net


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