Bumi Resources & Energi Mega, public expose materials
At 2 PM today, minutes away when you read this, both PT Bumi Resources Tbk and PT Energi Mega Persada Tbk will conduct public expose on the collapse of US$3.2 billion divestment of coal mining companies KPC and Arutmin and the future of the planned merger between Bumi & Merger. Below are the excerpts of their public expose materials available in full at JSX.co.id.
On The Collapsed Deal: Bumi & Borneo Lumbung Energi (the buyer) failed to agree the final price of assets (KPC, Arutmin & Indocoal).
On Merger: Both Bumi and Energi reiterates their plan to pursue the merger, subject to regulator and independent shareholder's approval. No significant impact of the cancellation of Bumi's asset divestment, Energi said. Bumi said with the collapse of the divestment deal, all plans ever disclosed to shareholders would be reviewed.
On Lapindo disaster: Commence relief well drilling next week, up to three rigs working, and likely kill date in December 2006 (way behind the government's claim of October, this is my comment).
On Divestment: Bumi claims several investors keen to buy minority shares at KPC and Arutmin. They would become strategic investors. No details available.
On Dividend: Payment would be done from company's net profit from this financial year. The amount would be adjusted with available funds paid by would-be strategic investors.
On Shares Buyback: Depend on the retained earnings available.
Others: Bumi is working on refinancing all loans to subsidiaries.
READ MORE!!!
On The Collapsed Deal: Bumi & Borneo Lumbung Energi (the buyer) failed to agree the final price of assets (KPC, Arutmin & Indocoal).
On Merger: Both Bumi and Energi reiterates their plan to pursue the merger, subject to regulator and independent shareholder's approval. No significant impact of the cancellation of Bumi's asset divestment, Energi said. Bumi said with the collapse of the divestment deal, all plans ever disclosed to shareholders would be reviewed.
On Lapindo disaster: Commence relief well drilling next week, up to three rigs working, and likely kill date in December 2006 (way behind the government's claim of October, this is my comment).
On Divestment: Bumi claims several investors keen to buy minority shares at KPC and Arutmin. They would become strategic investors. No details available.
On Dividend: Payment would be done from company's net profit from this financial year. The amount would be adjusted with available funds paid by would-be strategic investors.
On Shares Buyback: Depend on the retained earnings available.
Others: Bumi is working on refinancing all loans to subsidiaries.
Labels: Bumi Resources, COAL, Energi Mega Persada, Lapindo
READ MORE!!!
posted by yosef at 1:46 PM
4 Comments:
Did it ever occur to someone why would Bakries sell their so-called cash cow coal business to focus into undeveloped oil and gas company, Energi Persada. Do they really need the money to develop Energi or to pay back other debts. BTW, have they already paid back their loans they raised to buy KCP. If BUMI is a cash cow business, why do they borrow from the market time and again using the big investment houses? Is BUMI the Enron of Indonesia? Or, may be they are worried about tough competition from biodiesel in the near future.
It seems like the Bakrie family has not learned from their past mistakes.
Their plan to spin off Lapindo and sell it. If that really happens, the question is: Who wants to buy it? O o no worries: A Santa-island-registered SPV will. Why? Because, it's owned by the group too... got it dumbo??
This business model that only aims to accelerate positive cash flow from accumulating capital gains from series of corporate financial transactions is TOO RISKY. Even more risky if every one deal is slightly bigger than the previous one. They can't stop. or at least they should not. Even a bigger NO NO now because of Lapindo.
Whoever advised this model to the Bakrie family must've believed that the investment horizon was long enough for the group to retain this model until one of those companies bought and sold is sufficiently recapitalized, has a sizeable market share, but a high gearing on their book.
A high gearing? YES, it's like borrow more not to finance the company the loan is placed against, but instead use the proceeds to buy more companies. As easy as that.
So how would Bakrie refinance their expansive operation lately?
Well, teh formula: gearings + capital gains + internal cross subsidies + cost savings.
The internal cross subsidies are not because some are under extremely good management and some are not. But because of the different business cycles between different industries that the Bakrie companies operate in. Come one, it's a conglomerate with so diverse an operation. Too diverse in fact.
How about cost saving. How low can they go? Sure they can go low. All needed is a few skips of SOP and more prayer. For example, not installing casing when drilling kilometers into the earth. Hence, Lapindo my friend!!
Maybe Karma is really on play now. What? Ask Karma!!
Or maybe it's just because the prayers of those who sent invoice ages ago but never get paid are much stronger and genuine.
Maybe Lapindo is a reminder that basic greed for money has a basic rule of thumb too: You scratch my back, i scratch yours.
However, when everyone's back is scratched, who else will you go to?
At this moment, the group has enough backs to more than scratch: Those who are forced to deal with rains, heat and other unpleasant inevitable stuffs for living on a hot mud.
Meanwhile the group's top people can still ahve cheese and caviar on a private jet. Well they are the only private consumer of Boeing in Indonesia. Gieee.. one can't repeat the old day's glory in a few years though.
Maybe, just maybe... Lapindo was a God-sent. Whatever. Am getting too long and tiring.
Moral of the story: When something looks or sounds too good, it is!!
Especially when it comes to investment!!!
And lets look at the fingers in the pie affecting KPC management, the key investment.
In recent times there has been a flurry of job applications sent out by KPC management to reputable organizations both nationally and internationally. This was only exacerbated following the woefully hollow address to the management team by the new "YES MAN PUPPET MANAGING DIRECTOR" and the Aussie munyet.
It is common knowledge that finding new (competent) recruits in the resources sector is extremely difficult. How will KPC operate in the future without a significant proportion of its management team intact?
Anon,
is right on the money, all reputable companies and people that can are running a mile (those that are not in too deep) from KPC and their lies and false promises.
Not a bad effort to totally trash the reputation of a world class mine in less than five years, once again the international business community is left sctraching its head at the antics of "nationalised" business.
Rio Tinto must be in convulsions of laughter
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