Borneo Lumbung buys 23.8% interest in Bumi

Tuesday, 01 November 11

PT. Borneo Lumbung Energi (BORN), an Indonesian coking coal producer announces that it has signed a sale and purchase agreement, conditional upon shareholder, regulatory, and other approvals to acquire an effective economic interest of approximately 23.8% in Bumi Plc.

According to Borneo's press release, the total investment considered of US$ one billion values Bumi plc's shares at approximately GBP 10.91 per share at the date of the announcement and will be payable in cash.

Mr. Samin Tan, President director of BORN, said " This Transaction creates a partnership between two leading mining groups in Indonesia. Through this transaction, BORN will gain access to the growing thermal coal industry through a well established and major platform. The transaction also provides BORN with exposure to a high quality metals portfolio, thus transforming BORN from a pure coking coal producer into a world class diversified natural resources producer. This also signifies our intelligent way of deploying capital"

Mr. Tan Continued, "BORN has proven mine development skills from greenfield through to production stage and we look forward to working with and supporting current management across the Bumi plc group to execute development plants at the exciting new prjects at Dairi Prima Minerals, Gorontalo Mining and Bumi Mauritania as well as achieving synergies and efficiencies across the coal division. We are strongly committed to creating shareholder value at all levels from BORN to Bumi plc and its subsidiaries and associate companies."

According to BORN, this partnership transforms BORN into a leading natural resources company with exposure to both coking and thermal coal as well as a diversified high quality metals portfolio.

The Transaction positions BORN on the global map, as one of the leading mining companies in the world. BORN also believes, the demand and price outlook for the global thermal coal market is positive with China and India expected to be key growth drivers. The transaction provides BORN with exposure to this growth given Indonesia's proximity to both markets.

The investment is expected to be financed through a US$ one billion five-years amortizing term loan facility provided solely by Standard Chartered Bank. The press release further said, Standard Charted Bank is acting as the financial advisor and acquisition finance provider to BORN in connection with the Transaction.

The Transaction is expected to close in December 2011.

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(sourced coalspot.com)

Indonesia's Borneo Lumbung to buy Bumi stake for $1 bln

Tue Nov 1, 2011

* Deal to help Bakrie pay bulk of $1.35 bln debt, avoid default
* Deal values Bumi Plc at 10.91 pound each
* Talks with Glencore fail because lenders uncomfortable
* UBS says deal is net positive for Bumi

By Saeed Azhar and Fathiya Dahrul

SINGAPORE/JAKARTA, Nov 1 (Reuters) - Indonesia's Bakrie Group is selling a 23.8 percent stake in London-listed Bumi Plc , its joint venture with financier Nathaniel Rothschild, to coal miner PT Borneo Lumbung Energi in a $1 billion deal to avoid a loan default.

The deal with Borneo, which is backed by Indonesian billionaire businessman Samin Tan, would help Bakrie pay off the bulk of an $1.35 billion loan and extricate itself from a debt crunch that has weighed on the share price of the world's largest thermal coal exporter Bumi Resources .

The agreement between the Bakrie Group, run by one of Indonesia's most powerful families, and Tan marks the second time in three years that the Bakrie family has had to scramble together a transaction to ease its debt load.

The deal was sealed after Glencore , the world's largest diversified commodity trader, dropped out of talks on refinancing the Bakrie loan.

It also marks the second time Tan, a former partner at accounting firm Deloitte, has negotiated to buy a stake in Bumi, having failed to strike a bold deal in 2006.

Tan succeeded this time, with PT Borneo confirming the agreement in a statement, adding that the total consideration of $1 billion valued Bumi plc's shares at approximately 10.91 pounds each at the date of the announcement. That translates to a 6 percent premium to the last 6-month volume-weighted average price, and would be payable in cash.

"The biggest haircut in this deal has been taken by the Bakries," said a source with direct knowledge of the deal. "They have lost half their stake in Bumi Plc."

GLENCORE DEAL FELL THROUGH

Sources close to the deal told Reuters earlier that talks between the Bakrie Group and Swiss-based Glencore, the previous frontrunner, fell through because lenders were not comfortable with the structure of the proposal.

Glencore had been looking for additional marketing rights over Bumi's coal in return for lending Bakrie $800-$900 million.

"We think it is net positive for Bumi not having to incur higher marketing costs from allocating greater volumes to the trader," said Singapore-based UBS analyst Andreas Bokkenheuser in a note to clients.

However stock investors remained apprehensive as shares of PT Bumi Resources , Asia's biggest thermal coal exporter, and coking coal producer PT Borneo Lumbung Energi & Metal both fell.

PT Borneo dropped 11.7 percent and Bumi fell 4.3 percent, compared with a fall of 1.3 percent for Jakarta's benchmark index .

Tan indirectly controls 73 percent of PT Borneo and also owns Indonesian investment bank Renaissance Capital.

The Bakrie Group, a sprawling conglomerate with interests in property, energy, plantations, coal and telecoms, also fended off debt crises in 1998 and 2008.

Its controlling family is headed by Aburizal Bakrie, chairman of Indonesia's Golkar Party, who many analysts believe will run for the presidency of Southeast Asia's largest economy in 2014.

CONTROL OF MINES

Tan, an ethnic Chinese Indonesian from the small city of Bengkalis in central Sumatra, has previously played down any direct connection with the powerful Bakrie family.

In a 2006 interview with Reuters, he said he was a "simple, homegrown financial professional" and added that Renaissance was independent of Bakrie.

The deal, which would keep control of the Bakrie Group's world-class mines in Indonesian hands, is part of the family's attempts to refinance the loan obtained in March this year to consolidate debts.

Credit Suisse arranged the loan, secured against the Bakrie Group's roughly 47 percent stake in Bumi Plc, and lenders included the Swiss bank and a group of hedge funds.

Glencore, which already markets Bumi coal, has frequently used its deep pockets to help out troubled counterparties, cementing the relationships it sees as key to its business.

The world's largest diversified commodity trader had been ahead of rival Vitol and others in negotiating a deal.

Standard Chartered is advising Borneo and is also arranging the financing, while Credit Suisse is advising the Bakrie family and its various entities, the sources said.

"This transaction creates a partnership between two leading mining groups in Indonesia," said Tan, who is also president director of PT Borneo, in a statement.

"The transaction also provides BORN (Borneo) with exposure to a high quality metals portfolio, thus transforming BORN from a pure coking coal producer into a world class diversified natural resources producer."

After the transaction, Borneo together with PT Bakrie & Brothers Tbk and Long Haul Holdings -- companies controlled by the Bakrie Group -- would own an approximate 47.6 percent stake and an approximate 29.99 percent voting interest in Bumi Plc, according to the document seen by Reuters.

The deal is subject to approval of Borneo shareholders in a meeting on Dec. 15 -- a formality since the deal document states Tan's vehicle, PT Republik Energi & Metal, will put its 73 percent holding behind the agreement -- and certain other conditions, including regulatory approvals.

Bumi Resources' share price has been weighed down by investor concerns over high debt levels and transparency. Indonesia's stock exchange said last year it would fine three Bakrie firms, including the family's holding firm Bakrie & Bros, for failing to explain discrepancies in their financial reports.

The London-listing, a joint venture engineered by Rothschild, the billionaire scion of the European banking dynasty, through a complex reverse takeover, was meant to bring greater corporate governance and better access to capital.

But a sharp decline since June in the share price of Bumi Plc amid falling equity and commodity markets triggered a mandatory repayment clause on the one-year $1.35 billion loan that had been due to mature in March 2012.

(sourced Reuters)

Adaro Energy, Bakrie & Brothers, Bumi: Indonesia Equity Preview

Mar 7,2011 7:35 AM GMT+0530
By Berni Moestafa -

Shares of the following companies may have unusual moves in Indonesian trading. Stock symbols are in parentheses, and share prices are as of the previous close.

The Jakarta Composite index (JCI) gained 1.4 percent to 3,542.90.

Coal producers: Power-station coal prices at Australia’s Newcastle port, an Asian benchmark, fell 1.7 percent to $129.48 a metric ton in the week ended March 4, according to the globalCOAL NEWC Index.

PT Bumi Resources (BUMI IJ), Asia’s largest exporter of power-station coal, dropped 1.6 percent to 3,025 rupiah and PT Adaro Energy (ADRO IJ), Indonesia’s second-biggest coal mining company, gained 2.2 percent to 2,375 rupiah.

Energy companies: Crude oil for April delivery rose to a 29-month high in New York on March 4, advancing 2.5 percent to $104.42 a barrel. The contract was at $105.14 a barrel in after- hours trading as of 8:05 a.m. Jakarta time.

PT Medco Energi Internasional (MEDC IJ), Indonesia’s biggest listed oil company, fell 0.9 percent to 2,875 rupiah and PT Energi Mega Persada (ENRG IJ), the second largest, slipped 0.9 percent to 111 rupiah.

PT Bakrie & Brothers (BNBR IJ): The Indonesian investment company will get $601.75 million of loans from the Singapore unit of Credit Suisse Group AG, Bisnis Indonesia reported, citing Corporate Secretary R.A. Sri Dharmayanti. The loans will be used to repay debt, the report said. Bakrie & Brothers retreated 2.9 percent to 67 rupiah. (bloomberg)

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