Thursday, August 24, 2006

Bumi-Borneo US$3.2bn deal collapsed

The US$3.2 billion deal between PT Bumi Resources Tbk and PT Borneo Lumbung Energi collapsed on Thursday after Bumi decided to cancel the divestment of its coal mining subsidiaries PT Kaltim Prima Coal & PT Arutmin Indonesia to Borneo, JSX announced on Thursday.

JSX immediately issued a suspension of the trading of Bumi shares starting Friday 09.10 AM to prevent speculation. Suspension also applies to Energi shares trading. JSX made the decision after Bumi management told the stock exchange authority pursuant to a meeting on Thursday that the deal has been collapsed on undisclosed reason.
"I'll call you in 30 minutes," Samin Tan, president of PT Renaissance Capital and owner of Borneo when I called him for explanation today.
Earlier reports said Bumi had been tired of endless waiting for Borneo to close the deal over financing issues. The US$3.2 billion deal was supposedly financed with US$2.1 billion debt raised by Credit Suisse.
JSX said there is uncertainty over Bumi's future including the planned merger with PT Energi Mega Persada Tbk. Both companies are affiliated to Bakrie Family.
Earlier this month, sources told Reuters that Bumi had already started looking for new buyers.
"Bumi has lost patience with Renaissance," one source said on Monday.
Reuters reported on Monday that Renaissance has tried to lower the acquisition price, but Bumi is unwilling to do so because it views the problem at the mine, PT Arutmin Indonesia, as a one-off, sources said. It was caused by unusually heavy rains in the second quarter, they said.
The other mine Bumi is selling, PT Kaltim Prima Coal (KPC), Indonesia's largest coal producer and exporter, operated normally, one source said. KPC and Arutmin together accounted for 37 percent of Indonesia's 2005 coal exports.

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