Indonesia’s influential Bakrie family, the largest shareholder in London-listed miner Bumi, is considering selling off assets to repay a $1.34bn loan to a syndicate led by Credit Suisse, people familiar with the matter said.
The family’s most valuable asset is its 47 per cent stake in Bumi, raising the possibility of a sell-down and the introduction of new investors wanting exposure to Indonesia’s most lucrative coal mines.
Repayment on the Bakries’ $1.3bn loan, which is due in March 2012, has been brought forward because the market value of the family’s Bumi stake is no longer enough to cover it. The Bakries pledged the entirety of their Bumi shareholding as collateral for the loan.
Shares in Bumi – founded as Vallar last year by UK financier Nat Rothschild – rose 3 per cent to 731p on Thursday afternoon but remained below the 850p trigger point for the loan call. They have fallen sharply from their highs of £14 in April.
A representative for the Bakrie family could not be reached for comment. A group of 10 lenders headed by Credit Suisse has engaged in “fairly calm dialogue and discussion with the Bakrie family about how to resolve this”, said a person with direct knowledge of the discussions. Most of the investors are hedge funds.
The investors are seeking a pay-out of $100m or $200m, “within very short notice”, with total repayment expected by the end of 2011 or in the first quarter of 2012, the person said.
“Of course they don’t have $1.34bn in their account,” the person said. “The most important thing is they have extensive Vallar-Bumi assets and have shown willingness to divest assets. Time and again the Bakrie family has shown willingness to address liquidity issues with asset sales.”
Bakrie’s ventures span palm oil plantations, property, telecommunications and television broadcasters. But none of the assets, apart from the Bumi stake, appears to be worth enough to cover the Credit Suisse loan. The global market sell-off that started in August has hit emerging-market shares with force, sinking the value of listed investments such as Bakrie Sumatera Plantations.
Shares in this Jakarta-listed palm oil company have fallen 38 per cent since August 1. Its market value is now 3,300bn rupiah ($375m). But as with the telecoms company and others, the Bakries hold only a minority stake in Bakrie Sumatera Plantations, according to public filings.
A sell-down of Bumi would chip away at the family’s crown jewel: a 65 per cent stake in Kaltim Prima Coal (KPC), Indonesia’s largest coalmine which is controlled by Bumi’s Indonesian affiliate company. Under financial stress in 2008 the Bakries sold off a 30 per cent stake in KPC to India’s Tata.
“No one believes any more that they will be able to service the debt [without selling assets],” an analyst in Jakarta said.
A banker in London commented on the possibility of buyers taking 20 per cent of Bumi off the Bakries. “This is a perfect play for someone trying to get a premium coal division just by writing a cheque. It’s great for the Chinese. It’s great for the Indians who are desperately short of thermal coal.”
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