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| Since Bakrie & Brothers secured $1.34 billion in loans from Credit Suisse in March, its share price has fallen 23 percent. (Reuters Photo/Yusuf Ahmad) |
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Bakrie
& Brothers, the holding company of the Bakrie Group, has denied speculation
that the company is unable to pay its debts and is on the verge of default.
Eddy
Soeparno, Bakrie & Brothers’ finance director, said on Monday that the
company was not on the verge of or in default and was considering repaying or
restructuring its $597 million loan facility arranged by Credit Suisse “in due
course.”
“BNBR is
not in default and we are evaluating options to settle our debt,” he said.
Eddy
refused to comment on whether Bakrie & Brothers was going to sell its
ownership in Bumi Plc to Glencore International, the world’s largest publicly
traded commodities supplier, as a way to help settle its debt, which is due in
March 2012.
Citing an
unnamed source close to the matter, Bisnis Indonesia reported on Monday that
Glencore was considering purchasing a minority stake in Bumi Plc through the
purchase of $2.01 billion in convertible bonds to be issued by Bumi Plc.
That would
serve as the payment for the purchase of a 75.1 percent stake in Bumi Resources
Minerals, a subsidiary of coal miner Bumi Resources, the newspaper said.
Dileep
Srivastava, Bumi Resources’ investor relations director, said all of the
reports were just speculation.
“Bumi Plc
is a holding company that owns three of the world’s best thermal coal assets in
Indonesia. All are presently outperforming operationally. Therefore, what the
family does with their holdings is a non-issue,” he said in a statement.
He said the
key issue was the declining economies in the Europe and the United States and
had nothing to do with the Bakries or Bumi Resources.
“Because of
these assets, international investors in Bumi Plc should be able to weather the
market storm better than the others,” Dileep said.
Investor
reaction to the reports was relatively muted. Bakrie & Brothers fell 1.9
percent to Rp 51 while Bumi Resources lost 0.5 percent to Rp 1,920 on the
Indonesia Stock Exchange on Monday. In London trading, Bumi Plc gained 2.4
percent to 720 pence.
The Bakrie
family has been using its assets as collateral for loans, and it has formed
alliances in order to help repay some of its debts.
Bakrie
& Brothers put its 47 percent ownership in London-based Bumi Plc,
previously known as Vallar, as collateral for $1.34 billion in syndicated loans
arranged by Credit Suisse on March 2. The $597 million loan in dispute is the
first tranche of the $1.34 billion.
Since
Bakrie & Brothers signed the loan agreement with Credit Suisse, its shares
have fallen 23 percent.
Bakrie
Group and the Rothschild banking dynasty made alliances in November 2010 for
Vallar to receive a 25 percent ownership in Bumi Resources and a 75 percent
stake in Berau Coal Energy, another coal miner. In exchange, Bakrie Group owns
54.6 percent in the combined Bumi Plc.
The
Financial Times cited unidentified sources close to the matter on Oct. 6 as
saying that repayment on the loan, due in March 2012, had been brought forward
because the value of Bumi Plc was no longer enough to cover it.
Amid the
speculation surrounding the companies and a possible default, two brokerages
maintained their buy recommendation on Bakrie & Brothers and Bumi
Resources.
“It was not
known whether the aim of the sale of Bumi Plc was to repay the debt,” Samuel
Sekuritas Indonesia, a local brokerage, said in its daily stock market notes on
Monday.
It gave a
“speculative buy” recommendation on Bakrie & Brothers after reviewing a
statement from the company to the Indonesia Stock Exchange that it was not
going into default for its loans.
Kim Eng
Securities maintained a buy recommendation on Bumi Resources with a target
price of Rp 3,100, reflecting an 11.8 price-to-earning ratio for 2011.
Additional
reporting by Muhamad Al Azhari
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