Monday, September 04, 2006

Farallon-Rajawali to acquire Bumi assets?

PT Bumi Resources Tbk is reportedly engaged in a negotiation with a new alliance of a global fund manager & Indonesian conglomerate to replace PT Borneo Lumbung Energi as the buyer of its assets (PT Kaltim Prima Coal, PT Arutmin Indonesia, and PT Indocoal) with financial back-up from Credit Suisse.

Rumors in the investment bankers circle said Farallon Capital is reportedly the global fund manager, while the Indonesian group is Rajawali Corporation. Both companies---allied in the acquisition of Cemex SA shares at PT Semen Gresik---denied the rumor.
"They are working together to try to do that. But I don't think they will succeed...," an investment banker in Singapore said. He said JP Morgan, which also involved in the Cemex deal, approached Farallon-Rajawali. JP Morgan, an advisor for Bumi in the collapsed US$3.2 billion deal with Borneo, also denied the negotiation and rumor of the close relationship between JP Morgan and Farallon Capital.
JP Morgan helped Willow Finance (a vehicle owned by Bakrie family) in the issuance of US$205 million facility linked with Willow's shares in Bumi, exchangeable at Rp500/share. Farallon was the key financier for Bakrie family when they bought KPC from Rio Tinto through Merrill Lynch. Farallon also lent huge amount of money to Berau Coal investors when they bought the company from Astra.
Why doubt?
"It's too big even for them. They also don't have the operational expertise in coal mines. Besides, they already bussy with very ambitious goals for the company they just bought recently," he said.
Are they interested in buying minority stakes?
"No I doubt. These guys are only interested in if they can take the whole thing."
So, I other friends-analyst about Rajawali's chance.
"Where you got the information from? Let me check. But from what I read in the newspaper, with EBITDA below US$300 million in the first half, the assets would have low price. I don't think Bumi would proceed with the divestment."
Well, the poor EBITDA news is considered by some as the door to wage a hostile takeover. (By whom?)
What if Bumi cut the price?
"I think Bumi won't do that because it will send negative sentiment to the company's shares. Even if they do that Borneo has the biggest chance because the deadline for their the sales and purchase agreement (SPA) actually by the end of this month."
How serious? Could it be just part of efforts to boost market sentiment ahead of JSX's plan to lift the suspension on Bumi shares trading? Or to save the hedge funds who bought Willow Finance EB?
But, hostile takeover?
"I think, the Bakrie family is vulnerable to investors. If Bumi shares plunge, it would make sense for Willow bondholders to exchange into shares...sensing that, I wouldn't be surprised if the family is becoming defensive. I know some people out there would resort to hostile measures," said a senior analyst.
Tired or bored with the issue, go to Porong, Sidoarjo, enjoy the hot mud treatment there! They have new entertainment there...mud wrestling!

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Anonymous Anonymous said...

You're absolutely right!!!.
What Bumi's management thinks is how to revive its share price in the market.
It seems ridiculous to think that KPC will be a target of hostile take over.....Who will be the buyer? Is it Farallon?
I am sure in front of analyst tomorrow, Bumi's directors try to come out with a little higher earning....But still far below its target....
Please dont swing investor anymore with numbers and promising dividents and shares buyback....

September 05, 2006 10:45 AM  
Anonymous Anonymous said...

Caveat Emptor?

September 06, 2006 6:50 PM  

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