Bondholders of PT Bumi Resources (BUMI) have authorized a plan to accept the latest offer from the coal-mining group to restructure its $375 million of convertible securities, a person with knowledge of the matter said.
The decision was made after a global conference call late yesterday that was arranged by a noteholders’ committee run by investment bank Moelis & Co., the person said, asking not to be identified because the details are private. The group plans to seek the necessary level of consent from other bondholders so that the notes’ terms may be amended at a meeting in Singapore Aug. 22, the person said.
Jakarta-based Bumi is seeking to avert a default by issuing new 6 percent convertible securities due April 2018 to replace its existing 9.25 percent debentures that matured last week, it said in an Aug. 7 letter to investors. While it expects to pay the coupon by today, when a grace period expires, it won’t be able to redeem the $374.9 million of principal.
Weihan Lee, an executive director in Hong Kong at Moelis & Co., didn’t return two phone calls or immediately reply to an e-mail seeking comment. Helen Kwan, an associate at the investment bank, declined to comment when reached by phone.
Bumi is Asia’s most-indebted mining group with $4.2 billion of short-term liabilities. It’s set an Aug. 20 deadline to get the consent from bondholders to amend the note terms, and will then hold a meeting in Singapore Aug. 22 to vote on the changes, the Aug. 7 letter shows.
To be passed, the resolution “requires a majority in favor consisting of not less than three-quarters of the votes cast,” according to the letter. “If passed, the extraordinary resolution will be binding on all the bondholders, whether or not present at such bondholder meeting and whether or not voting.”
“The 75 percent threshold looks a bit challenging but at least they’re closer to a solution than two months ago,” said Trung Nguyen, a credit analyst in Singapore at independent research firm Lucror Analytics Pte. “The latest proposal is more reasonable for bondholders and may have been negotiated behind the scenes.”
Bumi director Dileep Srivastava said yesterday the company expects it will be able to extend the repayment of the notes’ principal until April 2018.
“We expect a favorable vote on August 22,” Srivastava said in an e-mailed response to questions from Bloomberg News Aug. 11. “As part of this vote any potential default would be waived without consequence.”
Shares in Bumi closed up 2.2 percent at 186 rupiah ($0.02) in Jakarta, the biggest one-day gain in a week. The company’s $700 million of 10.75 percent notes due 2017 fell 0.23 cents to 45.663 cents on the dollar, Bloomberg-compiled prices show.
Bumi last month sweetened its debt-exchange offer, proposing to split the convertible notes into two tranches, one of convertible debt and one of straight bonds. It held talks with a committee representing investors Nan Fung Investment Advisors Ltd. and Vervain Income Investment Ltd., as well as funds managed by Pine River Capital Management LP and JPMorgan Chase & Co.
An initial offer in June to defer payment to July 2021 and reduce the notes’ coupon to 7 percent failed because a bondholders meeting on June 20 in Singapore failed to achieve a quorum.
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