Bakrie tries debt swap
Indonesia’s Bakrie Group is set to announce a deal led by Indonesian investors Renaissance Capital by Tuesday to avert a default on a US$1.345 billion loan after talks with commodity giant Glencore fell through, three sources with direct knowledge of the deal said on Monday.
Renaissance Capital, led by Indonesian investor Samin Tan, is expected to provide financing to reduce the debt by $1 billion in exchange for an equity stake in London-listed coal miner, Bumi Plc, said one of the sources, who declined to be identified because the talks were not public.
The source said Indonesian coal miner Borneo Lumbung Energi, controlled by Tan, may get the stake in Bumi Plc, effectively becoming another holding firm, though the structure of the Bakries’ latest deal was not clear.
The deal, which would keep control of the Bakrie Group’s world-class mines in Indonesian hands, is part of its attempts to refinance the loan it obtained in March this year to consolidate its debts. Credit Suisse arranged the debt against the Bakrie Group’s 47 percent stake in Bumi Plc, and lenders included the Swiss bank and a group of hedge funds.
Glencore is no longer in talks with the Bakrie Group, two sources told Reuters, after having been the frontrunner ahead of rival trader Vitol in a deal to provide a loan in exchange for greater commodity marketing rights.
It was not clear why the Glencore deal fell through. Glencore, which already markets Bumi coal, was interested in refinancing, but did not want an equity stake, a source familiar with the matter said. It is also unclear if there are other investors behind Renaissance.
“Going from Glencore to the Renaissance fund makes the deal seem questionable,” said a Jakarta-based equity analyst, who declined to be identified.
Glencore, the world’s biggest diversified commodities trader, has a market value of $50 billion and has the funds to finance big deals. Renaissance is unlisted and Samin Tan’s indirectly controlled Borneo Lumbung has a market value of $2 billion, a little below Bumi Plc’s $2.2 billion.
Officials with the Bakrie Group declined to comment, while officials with Glencore were not immediately available to comment. Officials with Renaissance Capital could not be reached.
Shares in Bumi Plc slipped 0.7 percent in London by 9:18 a.m. British time, while Jakarta-listed Bumi Resources fell 4.1 percent and the group’s holding firm, Bakrie & Bros, slipped 1.9 percent, as equities fell across Asia.