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November 28, 2008

Northstar seen buying only 10-20% of Bumi

Private equity firm Northstar Pacific may buy only 10-20 percent of Indonesia's top coal miner PT Bumi Resources Tbk, rather than an agreed 35 percent stake, Reuters reported, quoting a business newspaper.

Debt-laden conglomerate Bakrie & Brothers said on November 1 it would sell 35 percent of Bumi to Northstar for $1.3 billion, but Bumi's shares have since slumped, prompting speculation Northstar may back out or try to pay less.

Bisnis Indonesia quoted Patrick Walujo, who runs Northstar, as saying the firm will go ahead with its plan to buy a stake in Bumi, but may only buy 10-20 percent.

"We will still buy Bumi and the purchase is entering its final phase. Due diligence is almost complete. We are now discussing the payment mechanism and determining the buying price of the shares. There is a scheme, there is money," Walujo said.

However, he said Northstar will not buy 35 percent of the shares as planned because Bakrie & Brothers had not settled its debt with creditors, including repurchase agreements on Bumi shares.

Northstar may buy 10-20 percent of shares which have already been settled between Bakrie and its creditors, Walujo was quoted as saying.

Bumi is the crown jewel of the Bakrie group, whose interests stretch from property to palm oil. But the group borrowed heavily using Bumi shares as collateral, forcing it to look for a sale when the shares fell as a commodities' bubble deflated.

Bumi was briefly Indonesia's most valuable listed firm in June, but its price has since fallen 87 percent, though the stock has bounced higher this week as investor focus returns to the bid.

Smaller local mining rival PT Tambang Batubara Bukit Asam, said earlier this week it was pulling out of the Northstar-led group buying the Bumi stake, blaming deteriorating share and credit markets.

Philippine conglomerate San Miguel Corp has said it plans a rival bid for 51 percent of Bumi, but has not said how much it would offer.

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