Bloomberg News

Standard Chartered Said to Delay Borneo Lumbung Loan Funding

December 20, 2011

(Adds potential bank commitments in eighth paragraph.)

Dec. 20 (Bloomberg) -- Standard Chartered Plc will delay financial close and funding of a $1 billion loan for PT Borneo Lumbung Energi & Metal until next year as the company waits on certain approvals from Indonesia’s capital markets regulator, according to a person familiar with the matter.

Borneo Lumbung is buying a stake in coal producer Bumi Plc from PT Bakrie & Brothers for $1 billion cash and said last month it will use a $1 billion loan from Standard Chartered to fund the acquisition. Borneo Lumbung plans to purchase a 23.8 percent stake in Bumi to access coal mines in Indonesia which supply China, the world’s second-biggest economy.

To proceed with the acquisition, Borneo Lumbung needs approval from shareholders at an extraordinary general meeting, the person said today. That meeting, originally scheduled for Dec. 15, can’t take place until Bapepam, the nation’s capital markets regulator, signs off on certain details surrounding the deal itself, the person said. Another date for the extraordinary general meeting hasn’t been set yet, the person said.

Standard Chartered, the loan’s underwriter, began marketing the five-year facility to a select group of banks in senior syndication last month. Banks are being invited to join the facility at three levels for titles of mandated lead arranger and bookrunner, and mandated lead arranger. Banks have been invited to join at the senior level with underwritten commitments.

Senior syndication is when a loan is marketed to a limited number of banks, most of which would have an existing relationship with the borrower.

Processing Credit Approvals

London-based Standard Chartered set a deadline of Dec. 30 for banks to respond and the facility will probably be syndicated more generally to a wider group of lenders in early 2012, another person familiar with the matter said on Nov. 17.

While no firm commitments have been received to date, several banks are processing credit approvals and plan to lend at least $150 million, the person said today.

A number of lenders are considering committing $25 million to $50 million on a take and hold basis, without underwriting, four other people familiar with the matter said today. The take and hold is the amount of a loan that banks intend to retain on their balance sheet rather than selling to other banks in general syndication.

Standard Chartered has had inquiries from some banks wanting to lend smaller amounts, the first person said today. Such lenders are expected to be approached for their intended contributions next year, the person said.

--Editor: Pavel Alpeyev

To contact the reporters on this story: Katrina Nicholas in Singapore at knicholas2@bloomberg.net; Wendy Mock in Hong Kong at wmock3@bloomberg.net

To contact the editor responsible for this story: Shelley Smith at ssmith118@bloomberg.net


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