Indonesia's Bumi Units File for U.S. Creditor Protection, Shares Surge
Bareksa • 02 Dec 2014
Area Tambang Bumi Resources (Company)
Bumi shares gained as much as 12.2 percent on Tuesday, their biggest jump since July
Bareksa.com - Shares in Indonesia's biggest coal miner PT Bumi Resources Tbk rose the most on Tuesday in over four months after three of its units filed for protection from U.S. creditors after failing to make debt interest payments.
The filing comes a week after Bumi Investment Pte Ltd, Bumi Capital Pte Ltd and Enercoal Resources Pte Ltd also obtained a six-month moratorium in a Singapore court against legal action from creditors.
Both moves give Bumi Resources, which was hard hit by a sharp drop in coal prices, more time to restructure its debts.
Bumi shares gained as much as 12.2 percent on Tuesday, their biggest jump since July, outperforming a 0.5 percent rise in the Jakarta stock exchange index.
According to the U.S. filing, Bumi Resources and its three units have missed several interest payments since September on debts worth a total $1.375 billion.
Bumi Resources has to reach an agreement with its creditors or undergo a restructuring process under Indonesian law to achieve "a meaningful recovery" for its units and affiliates, Chief Financial Officer Andrew Beckham said in the U.S. court documents.
Bumi Resources has an interest in 67 entities incorporated in various jurisdictions. These entities have either started a restructuring process or are preparing a restructuring plan, as well as negotiating with various creditors on their debt repayment.
Bumi Resources is part of the sprawling family-owned Bakrie Group conglomerate, which has aggressively expanded into energy, plantations, property and other businesses, mainly through debt-funded acquisitions.
Bankers and analysts say the group has often benefitted from its political ties, which Bakrie executives have repeatedly denied, saying the company does not mix business with politics.
Aburizal Bakrie, the eldest son of group founder Achmad, was chairman of Indonesia's second-largest political party Golkar for the past five years. He is seeking re-election to the party leadership, with the results expected as early as Tuesday.
Some party members blame Aburizal for Golkar's failure to secure more seats in parliament after April legislative elections. Golkar also backed Prabowo Subianto, who lost the July presidential election to Joko Widodo. (Source : Reuters)