Bumi Resources gets below US$1.8 billion

PT Bumi Resources Tbk will likely only get net proceeds of US$1.8 billion the most out of US$3.2 billion divestment of two coal mining subsidiaries PT Kaltim Prima Coal (KPC) and PT Arutmin Indonesia due to heavy debts and payables.

An investment banker close to the deal said out of the US$3.2 billion deal, US$800 million would be to pay Bumi's debt and US$600 million to pay contractors and suppliers of KPC and Arutmin.

PT Borneo Lumbung Energi has been struggled to get US$3.2 billion funding for the acquisition of Bumi's assets in which CSFB would raise US$2.2 billion loans and Borneo's equity of US$1 billion. So far, Nirwan Bakrie is reportedly had subscribed US$200 million equity for the transaction, while other parties have not committed yet.

"The question is how much equity Renaissance/Borneo could raise to pay Bumi. If they fail, most likely will only get promissory notes," the banker said.

Several names, such as Marubeni and Leighton Contractors, were expected to participate in the acquisition. But Marubeni is reportedly don't want to put equity. Leighton was participated in the US$404 million financing of the acquisition by PT Bumi Resources of PT Kaltim Prima Coal few years ago.

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