Monday, August 14, 2006

Lapindo disaster updates: Forget about Bumi-Energi merger!

As predicted, the hot mudflow disaster from Lapindo Brantas Inc's drilling in Sidoarjo, East Java have spilled over to the planned merger of two related companies PT Bumi Resources Tbk and PT Energi Mega Persada Tbk (parent company of Lapindo). There are too many uncertainties and risk factors that put the merger on the verge of collapse. reported on Monday that 945 people from 235 families relocated from the areas hit by the mudflow have been suffered many health problems mainly accute respiratory, fever and stress. There are 19 plants in the area that have stopped their operations and sending home thousands of workers. Several groups are working on class actions toward Lapindo with huge potential financial liabilities.
While government is focusing on the disaster management and no firm decision made on the future of Lapindo Brantas Inc's operation in the area, the catastrophe could potentially disrupt Energi Mega's corporate action, especially the planned merger with Bumi Resources.
Both companies planned to merge their operations 1:1 at Rp800/share. Bumi shares closed at Rp780 and Energi at Rp590 on Monday trading.
Another great concern is uncertainty over Bumi's US$3.2 billion divestment of Kaltim Prima Coal and Arutmin Indonesia to PT Borneo Lumbung Energi. The deal was supposedly
closed two months ago to materialize the merger as late as of July. But both major transactions delayed significantly. And further delay would potentially cancel both deals. Bumi and Energi have postponed the shareholder meeting to vote on the merger to next month. But as there is no positive sign on Bumi-Borneo and the unstoppable mudflow in Lapindo, we may have to forget about the Bumi-Energi merger for a while. Or forever?

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Anonymous Anonymous said...

Just want to add another story of the merger story.

August 15, 2006 2:14 PM  

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