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December 3, 2008

Indonesia: Bourse to ask details of Bakrie-Northstar deal

Indonesia Stock Exchange said on Tuesday it would ask the Bakrie group to explain the revised terms of its deal with Indonesian private equity firm Northstar Pacific, following confusion among investors, reported Reuters.

The politically connected Bakrie group, which owns a stake in Indonesia's biggest coal miner Bumi Resources and which was struggling to repay some $1.2 billion of debt due in April, originally said it would sell a 35 percent stake in Bumi to Northstar in a deal valued at $1.3 billion.

But on Friday, following a slump in Bumi's share price and the completion of due diligence on the deal, Northstar said it would take over a significant chunk of the Bakrie group's debt and would then convert the debt into shares in Bumi.

Bakrie & Brothers, the group's holding company, said late on Friday night that most of its short-term debt problems had been settled following the deal with Northstar.

Bumi's share price initially rose on Monday before ending sharply lower, as investors were confused about the terms of the deal. On Tuesday, the stock dropped nearly 10 percent, the daily downside limit, to 850 rupiah.

"Until now we have not received any letter from Bakrie & Brothers. We just received their press release," Eddy Sugito, listing director of Indonesia Stock Exchange told reporters.

"We asked them to report the details of the deals since the public deserve to know why there was a sudden change in the nature of the deal from the previous plan," he added.

Bakrie is controlled by the family of Indonesia's chief social welfare minister, Aburizal Bakrie, and has interests in palm oil, telecoms, and property, but Bumi is considered its crown jewel.

Separately, Northstar's founder Patrick Walujo told Reuters that U.S. major private equity firm Texas Pacific Group, with which Northstar has a joint venture, has decided not to take part in the consortium to invest in Bumi.

Ancora Capital Management (Asia), another Indonesian private equity firm, has taken a stake of up to 5 percent in Bumi, worth about $75 million, a person familiar with the situation said on Saturday.

The Bakrie group has been struggling to raise money in order to repay about $1.2 billion of debt at a time when investors are pulling out of emerging markets such as Indonesia amid a global financial crisis and credit crunch.

Some analysts and traders complained that they did not have enough details to assess the deal. For example, it is not known how big a stake Northstar will eventually have in Bumi following the debt-for-equity conversion.

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