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BNBR 50.00 0.00%
BRAU 92.00 -3.16%
BRMS 250.00 -1.19%
BTEL 50.00 0.00%
BUMI.JK 155.00 -0.64%
DEWA 50.00 0.00%
ELTY 50.00 0.00%
ENRG 89.00 0.00%
MDIA.JK 1,850.00 0.00%
UNSP 50.00 0.00%
VIVA 200.00 -1.48%
On Tuesday, Jul 22, 2014 10:36

Friday, May 11, 2012
Bumi to Update on Structure Overhaul By Year-End
by Reuters
LONDON, May 10 (Reuters) - Indonesia-focused miner Bumi Plc will update the market by the year-end on plans to streamline its structure and boost shares, potentially by merging Indonesian-listed miners Berau and Bumi Resources, Chief Executive Nalin Rathod said on Thursday. The simplification of Bumi's complex corporate structure is seen as one of several elements that are vital to the re-rating of its shares, down almost 50 percent this year.

The London-listed miner, originally a venture set up by financier Nat Rothschild, is one of the world's largest exporters of thermal coal, supplying China, India and Japan. But the miner has been battered by the debt woes of its Indonesian investors -- the influential Bakrie family -- and boardroom scuffles with Rothschild.

 It says disagreements with Rothschild were resolved with changes to the board which brought in Rathod, but the shares have yet to recover analysts estimate Bumi trades at a more than 30 percent discount to the sum of its parts.

Bumi Plc's chairman, investor Samin Tan, has signalled he would like to see a merger between part-owned miners Bumi Resources and Berau Coal, to create a coal arm, as part of efforts to revive the stock.

"We are working on legal, commercial and regulatory issues We will have a formal statement once we complete all the procedural issues," Rathod said in an interview after the company reported a 9 percent rise in first-quarter output, despite a strike and heavy rains that hit Borneo. "We will make an announcement before the end of this year."

London-listed Bumi Plc owns 29 percent of Bumi Resources and 85 percent of Berau. Rathod said the company was also making progress on another key plank of its turnaround - reducing the crippling cost of debt - and could help those efforts by selling down some of the 87 percent stake in Bumi Resources Minerals it holds through Bumi Resources, or one of BRM's early-stage projects.

"Both options are open," he said, adding it would otherwise rely on cutting costs to boost cash flows and pay down debt.

The company is in talks with Bumi Resources creditor China Investment Corp, hoping to repay early an outstanding $1.3 billion loan, though only $600 million would in principle be eligible for early repayment this year. The first tranche of the loan, the largest single component of Bumi Resources' debt pile, was repaid last November.

It hopes to more than halve the current cost of the CIC debt, which pays a cash coupon of 12 percent and an additional amount on maturity, taking total annual returns to 19 percent. Bumi said it mined 20 million tonnes of coal in the quarter, up 9 percent despite flat output from Kaltim Prima Coal (KPC) after heavy rains at the start of the year. It said it was on track to meet 2012 targets, and its expansion programme was progressing to its target of 140 million tonnes in 2014.

Rathod declined to comment on efforts by the Bakrie group, controlling shareholders along with other Indonesian investors, to resolve a covenant breach on a $437 million loan after the drop in Bumi Plc's shares, also pledged as collateral.

Samin Tan, who pulled the Bakries back from the brink after a debt crisis last year, is expected again to be part of the solution, but the group is still negotiating with creditors.