Who owns Bumi Resources?

PT Bumi Resources (BUMI) Tbk is still the busiest "casino" on Indonesia Stock Exchange (IDX). Interestingly, according to the report filed by share registrar PT Ficomindo Buana, nobody owns over 5% shares in this company.

There are 51,861 shareholders in BUMI, consisted of 50,638 domestic investors and 1,223 foreign investors. Individual domestic investors (49,666) own a combined 25.34% shares, while 444 foreign individual investors only own 0.5%. Foreign institutions (792) control the majority of shares with 53.95%, while 715 domestic companies own 18.72%.

So, why BUMI is still "controlled" by Bakrie Group and its people? Through vehicles?

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Lapindo mudflow, what's up?

National media reported that three SBY-Boediono cabinet members visited the area flooded with Lapindo mudflow in Sidoarjo, East Java on Saturday. They "inaugurated" the piling of a fly over for Porong-Sidarjo toll road. The fly over shall be built because the mudflow cut the route seriously, especially in KM 35. This is one of the costs incurred by the mudflow the State generously pays.

The visiting ministers are Djoko Kirmanto (public works), Gusti Muhammad Hatta (environment), and Fadel Muhammad (fishery). People in East Java have suffered for almost five years due to this mudflow. The cost of the mudflow has been ballooned. Why?

President SBY issued Regulation No. 40/2009 in September 23, 2009 which basically lifted the financial burden off Bakrie's shoulders. The new regulation changed some articles of President Regulation No. 14/2007 about the Sidoarjo mudflow. One of the key articles abolished is Article 15 point 5 where PT Lapindo Brantas, controlled by Bakrie Family, initially bear the cost of handling the mudflow.

Under the new regulation, all the related costs of the mudflow will be sourced from the State budget. Lapindo's obligation is limited to the purchase of land and buildings of the victims pursuant to the new map. Lapindo shall pay 20% upfront, while the balance shall be paid one month before the 2-year house rent expired.

But according to the new regulation, the 20% shall be paid in 2008, 30% in 2009, and the balance will be paid gradually. The State Budget had allocated Rp600 billion in 2007, Rp1.57 trillion in 2008, and Rp1.15 trillion in 2009 for rehabilitation of public infrastructures affected by the mudflow.

The President Regulation No. 14/2007 was actually designed as "burden-sharing scheme" between the State and the Bakrie Group.

SBY initially issued Decree No. 13/2006 about the establishment of national team for the mudflow, supervised by energy minister (Purnomo Yusgiantoro), public works minister, fishery, and environmental affairs plus East Java governor, Brawijaya regional military commander, and East Java regional police chief.

The cost was initially a full responsibility of Lapindo. But President Regulation NO. 14/ 2007 lifted substantially some of the financial burdens from Bakrie's shoulders, especially rehabilitation of public infrastructures and operational costs for the national team (article 14).

So, the mudflow-related costs lifted from Bakrie's shoulders are: Rp2.11 trillion to move the railway line, turnpike, build new highway, and gas pipeline, plus Rp612 billion for construction of a canal to channel the mud to the Porong River, Rp300 billion for dam construction, and operational costs of mudflow handling at about Rp100 billion per annum. How much is that? Rp3.12 trillion or about US$320 million.

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Politicians who tweet

It's just amazing that Twitter gained so much popularity in Indonesian politics. President candidates have their accounts created by campaign managers. But some have their personal accounts. Vice President Boediono is one of the most active Twitters. He posted 144 tweets and has 34,293 (at least check) followers and following 996.

His last tweet was on January 11th when he was about to testify before the House special committee to investigate Century case. He also uses the Twitter account to communicate his views, feelings, and "campaign" on certain issues. ICT minister Tifatul Sembiring is also on Twitter. He has lot more followers than Boediono. He has 37491 followers, is following 1541, and posted 1810 tweets already. The last tweet was two hours ago when the politician from Prosperous Justice Party (PKS) was preparing for Gunung Gede hiking in Cipanas, West Java. He invited people to join. He is following Microsoft founder and owner Bill Gates on Twitter. Tifatul has more followers than popular artist Agnes Monica (36,533) who has tweeted 978.

The hottest is probably Aburizal Bakrie's account. Aburizal is chairman of Golkar Party and Bakrie Group of Companies. Aburizal has less followers (5664) than both Boediono and Tifatul. Aburizal effectively uses his account to defend some allegations on his group and Golkar Party. He is following only 11, but has tweeted 351. He is following tweets from his son Anindya Bakrie (CEO of Bakrie Telecom). The last tweet was 8 hours ago when he updated his whereabouts: Jambi, Padang, Bintan (all in Sumatra region) for Golkar Party affairs.

Aburizal's account is also a place for "discussion" of issues like Lapindo mudflow, allegation of tax evasion on Bumi Resources, and "impeachment" motion by some Golkar politicians.

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Bakrie stocks fall

Global and regional market pressures, combined with negative sentiment on commodities following the fall of crude oil to about US$75 per barrel, hit Bakrie-related stocks. Bumi Resources, the most traded stock on IDX, slashed 5.5% this morning, while Bakrieland's plan for a new deal with Limitless (Dubai World) failed to stop the stock from falling almost 6%. Bakrie Sumatra Plantation also lost almost 5% this morning.

Bumi Resources (BUMI) is under selling pressures with over 200 million shares traded so far this morning. All coal stocks in the region dropped substantially. Shenhua lost 4.81% in Hong Kong, Adaro -2.6% in Jakarta, and BHP declined 2.8% in Sidney. Indika, Indo Tambangraya, Bukit Asam, Straits Asia, and Rio Tinto are all in negative territory. 

The crude oil's fall also hit oil and gas stocks. Medco lost 3%, while Bakrie's Energi Mega Persada declined 0.6%. CNOOC and Petrochina slashed 3.72% and 1.63% in Hong Kong, while Woodside and PGN lost 2.53% and 1.33% respectively.

Plantation stocks also lost ground, led by those listed on SGX (Indofood Agri and Golden Agri conceded 4.9% and 4.5% respectively), while Bakrie Sumatra, Sampoerna Agro, and Astra Agro Lestari declined 4.8%, 1.72%, and 1.41% respectively in Jakarta.

BCA, the third largest company on IDX by market cap, lost 2%, while Mandiri and BRI conceded 2.13% and 1.27%. Danamon led the downfall with -4.67%. Telkom, the largest company by market cap, also dropped 2.12%.

IDX composite index declined as much as 2%, while rupiah lost 100 points against USD. 

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Clean Golkar Caucus? BIG JOKE!

A group of Golkar politicians established what they called "Clean Golkar Caucus" to unseat party chairman Aburizal Bakrie. While they might pointed to the US$220 million tax manipulation allegedly committed by Bakrie-related companies as the rationale for replacing Aburizal, the caucus' name is a problem. "Clean Golkar politicians? What a big joke," a friend commented.

Zaenal Bintang, founding member of the caucus, said Aburizal shall resign temporarily. "He shall resign," Zaenal told the press in the residence of former coordinating minister for the economy Rizal Ramli.

So, who is the "clean" guy to replace Aburizal? Zaenal promoted Agung Laksono (currently the coordinating minister for people's welfare, replacing Aburizal). Agung is also deputy chairman of Golkar Party. Is he clean?

Well, that's not important for them. But they could ride on the recent political dynamics where Golkar, a member of the ruling coalition, is in the frontline on ongoing investigation on Century bailout. 

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Equity market maneuvers hit Bakrie stocks

Seven Bakrie-related stocks lost ground today for various reasons, but mainly on plans to issue new shares. Bakrie Sumatra Plantation was hit the most, crashed 17.65%. 

Sector-wise, plantation stocks were mainly closed in higher grounds in Malaysia, Singapore, and Indonesia. One exception is Bakrie Sumatra Plantation which reportedly plans to issue new shares to finance acquisition of plantation and oleochemical assets.

Energi Mega Persada (ENRG), oil and gas producer, also lost another 4.02%. This company is also in the process to raise over US$500 million from new shares issuance (rights issue). Reports about US$10 billion bailout on Dubai World failed to help Bakrieland (ELTY). The stock lost another 4.65%. 

Darma Henwa (DEWA), coal mining contractor, lost 4.35% today. DEWA is also in the process to raise funds from the equity market. PT Bumi Resources (BUMI) Tbk, which is being investigated for underpayment of taxes along with its subsidiaries (KPC and Arutmin), declined 2%, while Bakrie & Brothers (BNBR) slashed 3.23% and BTEL lost 2%.

Bakrie-related stocks, as usual, dominated the top 10 most active stocks on IDX with trading value above Rp600 billion. 

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Panax and Dairi Prima talks

Panax Geothermal Ltd claimed it has entered into a memorandum of understanding with PT Dairi Prima Mineral, a subsidiary of Herald Resources Ltd, allowing for negotiations towards the establishment of a JV to conduct joint exploration and development of identified geothermal prospects in North Sumatra for future base-load power supply to Dairi Prima zinc/lead project.

The electricity requirements for this off-the-grid mine can be met by a power plant with a 20 to 30 MW installed capacity. The area surrounding the Dairi Prima project hosts numerous geothermal prospects associated with Quaternary volcanic centers along the Sumatran transcurrent fault, Panax told ASX this morning.

Under the MoU, Panax will fund a review and pre-feasibility study, of the current target areas that have been identified with a view to the identification and application for suitable tenement areas, prior to the commencement of drilling activities.

Herald Resources is controlled by PT Bumi Resources (BUMI) Tbk, affiliated with Bakrie Group. BUMI spent almost US$600 million to acquire Herald and will spend another US$211 million to develop the Dairi Prima project.

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ANTAM pulls out of Newmont divestment

West Nusa Tenggara (NTB) governor Zainul Majdi said state-owned mining company PT Aneka Tambang (ANTM) Tbk has pulled out from its participation in acquiring PT Newmont Nusa Tenggara (NNT) shares. 

Majdi said he met ANTM management this morning, where ANTM insisted on getting at least 50% of the 31% shares to be divested, pretty much similar with the statement of SOEs minister Mustafa Abubakar yesterday. But looks like local administrations managed to mount pressures in the past few hours. "Antam decided to drop the plan to participate in the acquisition of 14% shares scheduled for divestment in 2008 and 2009. As a result, all the shares will be purchased by local administration," Majdi claimed.

Yesterday, SOEs minister assigned ANTM to represent central government in the acquisition of 31% shares pursuant to a cabinet decision. Local administration has engaged with PT Multicapital, a JV between Bakrie, Bumi Resources, and Recapital Advisors, as exclusive partner in the acquisition of 10% shares scheduled for divestment in 2006 and 2007. The total consideration for shares to be divested in 2006-2009 is about US$890 million, while the remaining 7% is scheduled for divestment next year at undecided price.

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Bakrie unit pays US$77M for 10% in Masela

PT Energi Mega Persada (ENRG) Tbk informed stock market authorities today that its wholly owned subsidiary PT EMP Energi Indonesia will pay US$77.25 million for the acquisition of 10% shares in Masela Block PSC.

ENRG, a company controlled by Bakrie & Brothers (BNBR), will also pay certain pre-completion adjustment pursuant to farm-out agreement between EMP Energi and Inpex Masela Ltd. The company has yet to disclose financing of the acquisition.

The acquisition is pending approval from public shareholders, Upstream Oil and Gas Regulatory Body (BPMigas), shareholders of Inpex Masela Ltd, and the signing of joint operating agreement.

Masela PSC is expected to commence LNG production of 4.5 million tons per annum and 13,000 barrels of condensate per day by 2016.

ENRG closed lower by 1.64% at Rp300 today. The stock has lost 30% its value in recent weeks. Still, it gained over 200% YTD.

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Bakrie Life default

PT Asuransi Jiwa Bakrie (Bakrie Life) has reportedly defaulted payments to about 40 out of 100 investors in the insurance' product which pooled Rp370 billion funds.

Bakrie Life had offered installment of 1% per month for the defaulted payments, but investors rejected. Bakrie Life's Diamond Investa managed to pool Rp370 billion in the product. It is not clear where Bakrie Life invested the money. Investors were promised for placements in bonds (90%), stocks (5%), and time deposits (5%). But some investors were informed that up to 70% of the funds have been placed in stocks, mainly Bakrie-related stocks. The case is being investigated by Capital Market Supervisory Agency (Bapepam).

Bakrie Life is controlled by PT Bakrie Capital (94%). Bakrie Capital is controlled by Nirwan Bakrie and family. Infobank magazine crowned Bakrie Life as the best life insurance last year. What?

PT Maxima Financindo through PT HD Capital Tbk is reportedly planning to acquire Bakrie Life. HD Capital is famous for repurchase agreements with Bakrie Group. But Bapepam said Bakrie Group can't just walk away from its obligations to investors.

Bapepam suggested investors to file lawsuit against the insurer. 

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Bakrie to build copper smelter

PT Multicapital, a company controlled by Bakrie Group, plans to build copper smelter in West Nusa Tenggara in a JV with PT Daerah Maju Bersaing.

The copper smelter is part of a JV agreement between Multicapital and PT Daerah Maju Bersaing, a company established by local administrations in West Nusa Tenggara, to purchase 10% shares of gold and copper producer PT Newmont Nusa Tenggara.

Others are US$4 million guaranteed payment from Multicapital to DMB per year starting next year even if Newmont doesn't pay dividend. Multicapital will have 75% shares in the JV, PT Multi Daerah Bersaing, while DMB with 25%. Multicapital will finance the acquisition of 10% NNT shares for US$391 million.

The newly deliberated Mineral and Coal Law obliges mining companies to process locally the mineral ores. Some groups have announced plans to build copper smelters in Kalimantan and Sulawesi.

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Energi Mega reported higher oil & gas output

PT Energi Mega Persada (ENRG) Tbk---controlled by Bakrie Group---reported average oil and gas output of 29,100 boepd in the first half 2009, increased 16% from the same period last year.

ENRG told Indonesia Stock Exchange (IDX) today that the output is below its target of 30,000 boepd. ENRG acquired 53.4% participating interest in Tonga Block PSC last year for US$11.8 million. The block is estimated to have 90 million barrels of oil equivalent of resources.

ENRG stock price declined 2.9% to Rp335 today. But the stock surged 385% since April despite poor results in Q1 2009 where the company reported net loss of Rp18.5 billion. At Rp338, ENRG has market capitalization of US$480 million.

The company has total asset of Rp13.365 trillion as of March 31, 2009 with liabilities of Rp9.463 trillion. Last year the company booked net loss of Rp34.9 billion despite strong sales growth to Rp1.86 trillion. 

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SBY-Boediono, landslide victory in Lapindo area

For over three years, newspapers have been filled with reports about complaints from Lapindo mudflow victims in Sidoarjo, East Java. Lots of criticism towards SBY-Kalla administration and Bakrie. Yet, SBY-Boediono scored landslide victory in the area where victims have been relocated.

This report from Surya, a newspaper published in Surabaya, East Java, on Wednesday needs explanation from sociologists and political scientists. According to the report, there were two polling stations in Kedung Solo, Porong sub-regency with 1,280 registered voters.

Results?

About 44% didn't vote, turnout votes 56% o3 717 voters. It is relatively low compared to the national average, understandable. What's interesting, out of 717 voters, 613 voted for SBY-Boediono or 85%, far above the national average of 60%. 

Surya also reported from two other polling stations nearby: TPS-2 at Siring Village and TPS-3 at Besuki Village. SBY-Boediono got 79% in Siring and 96% at Besuki.

Why? Probably they're better off now? Or is it because of "money politics" like in this report from Beritajatim.com where Sidoarjo regent Win Hendarso gave out US$5 per victim on election day? The report also mentioned about the direct cash assistance (bantuan langsung tunai, BLT) awarded to the victims.

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Golkar chairmanship race intensifies

Hours after quick counts shown Jusuf Kalla, chairman of Golkar Party, lost the presidential race, various groups have intensified maneuvers to accelerate the party's convention to elect new chairman. 

Today, Ridwan Bae, head of South East Sulawesi chapter of Golkar Party, claimed Aburizal Bakrie has secured support from 500 regency and provincial level leaders of the party to be the new chairman.

Bae predicted Surya Paloh, chairman of advisory board of Golkar Party, will be Bakrie's main competitor in the race. But he believes Bakrie will get additional support from Agung Laksono (currently deputy chairman) and Akbar Tandjung (former chairman). According to Bae, Tandjung will be the new chairman of advisory board, while Laksono might be the new secretary general.

Bae claimed significant support for Bakrie has nothing to do with "money politic". Really? Well Fahmi Idris, head of Kalla-Wiranto's campaign team, believes those local chapter leaders approached the potential candidates because of "money". He didn't mention names, but people know what he really means.

Bae also dismissed speculations that president SBY supports Bakrie's candidacy for Golkar chairmanship.

Kalla expects his successor will be from young generation. Kalla insisted that the party doesn't need an accelerated convention (ahead of the normal schedule in December). Idris echoed Kalla's suggestion to let young generation leads Golkar. (Notes: Bakrie is 63, while Paloh 58) Unfortunately it's not clear what age is considered "too old" to be a chairman of Golkar.

But looks like, some leaders wanted such acceleration. Fadel Muhammad, for example, suggests an accelerated convention. But others, like Syamsul Ma'arif said Kalla's performance in the election can't be used to justify an extraordinary convention.

Theo Sambuaga, another Golkar leader, believes there will be no extraordinary convention. But looks like some Golkar leaders have been trying to bring back the party to a coalition led by president SBY's Demokrat Party and be part of the next ruling administration, as usual. Other leaders, including Yogyakarta Sultan, suggests Golkar to become an opposition party. But looks like that's not a favorable option. 

 

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Bakrie & Daewoo pipe cooperation

PT Bakrie & Brothers Tbk admits the signing of a memorandum of understanding to develop and marketing pipe products with Daewoo International Corporation. In a letter to JSX today, Bakrie said both companies agree on development and marketing of pipe produced by subsidiaries, PT South East Asia Pipe Industries (SEAPI) and PT Bakrie Pipe Industries. Details of the cooperation will be announced to investors at public expose scheduled next week.

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Bakrie family divest 700 million Bumi shares

Long Haul Holding Ltd, a company owned by Bakrie family and some businessmen, is scheduled to divest 700 million shares of PT Bumi Resources Tbk through JSX today at Rp840/share, Bisnis Indonesia reported. Long Haul is the owner of 1.08 billion shares of Bumi, represents 5.59% of outstanding shares. Total proceeds from the divestment for Bakrie, with CLSA as the book runner, would be Rp588 billion. It's not clear what the family will do with the money. "The family is clearly in need of enough liquidity. But I'm not sure what exactly," one executive close to the family said.

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Sukanto Journalism School in Spore, why not here?

Investor Daily reported that Indonesia's richest man Sukanto Tanoto donated S$1 million to journalism school at Nan Yang Tech University in Singapore. The money would be used to finance two Indonesian students per year to learn journalism in Singapore. Quite strange, learning journalism in a country without press freedom? Why not in Indonesia?

Donation is an noble act. You could be seen by some as a noble man, while others may keep calling you a 'thief' because you had walked away from liabilities in the past as what Anwar Nasution, chairman of BPK always labelled on Indonesian conglomerates.
As for Sukanto, through his Tanoto Foundation, he is actively involved in what some newspapers called phylantropy. He's not alone. Eka Tjipta, Aburizal Bakrie, Soeharto have similar foundations. Besides, foundation is the perfect way to pay less tax to the state. Well, I should ask MoF Sri Mulyani about tax payments of Indonesia's richests.
With USD2.3 billion wealth (according to Forbes), donating S$1 million is clearly a peanut. But that amount is big enough to build elementary schools in the country, which from my perspective is the weakest of our educational system.

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Bakrie's next move to pay the bills

What will Bakrie family do to pay the sky high bills of Lapindo disaster?

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Counting the losses

As thousands of displaced people (due to hot mudflow from gas field operated by Lapindo Brantas Inc) went on protest yesterday for months of gross neglience over the promised compensation and 12 people killed in a gas pipeline burst in the area covered by Lapindo mud, we're increasingly bussy in counting the losses and yet we have no idea who will pay. Why don't establish an escrow account, funded by Bakrie (if that's the commitment) with tight independent supervision to underwrite the costs?

Some was cynical when Greenomics claimed the cost incurred of hot mudflow could be billions of US dollars calling the NGO of exagerating. Government then put the estimated cost of US$150 million till March 2007. This magic number is being used by Lapindo-related parties as the total liabilities in their hands over the disaster.
But look at the claims so far. PT Jasa Marga, the state-owned turnpike operator, stated today that the cost to build a new toll road in the area would be Rp1.5 trillion and no way the company would finance that. "Lapindo should bear the cost," said Frans Sutikno, CEO of Jasa Marga.
I'm afraid the state-owned railway operator PT Kereta Api Indonesia would spend billions of rupiah to re-route the track. And the residents who lost their land claimed compensation of Rp1 million/square meter. Millions of toll road users have been suffered huge mental problems and economic losses due to the closure of the turnpike.
Millions of cubic metres of hot mud has spewed from the site, flooding over 400 hectares, swallowing eight entire villages, hectares of rice paddy fields and numerous factories in East Java, and displacing more than 10,000 people.
The gas pipeline burst is apparently the worst so far, killing 12 innocent people and injured 16 others.
As reported by Tempointeraktif.com, state-owned gas distribution company PT PGN Tbk recorded billions of rupiah of losses in the last few days. At least 244 companies, 74 hotels, and 1,090 households got no gas supply due to the explosion.
Paper manufacturer PT Kertas Leces, a state-owned company, reported Rp500 million losses in two days only. Industrial gases producer PT Samator had to stop its hydrogen, hydrogen peroxide, and carbondioxide facilities with billions of rupiah of losses. Who will pay all of these? Can we just separate the pipeline burst from the mudflow? When would all of these going to end or an endless mess? Is it possible that the worst is yet to come?
On the other end, PT Energi Mega Persada (the parent company of Lapindo Brantas Inc) filed bad and good news late last week. The first, bad one, due to the pipeline burst, Energi had shutdown gas production in Kangean Block. The second, the same day of the explosion, EMP Kangean which operates the block, had successfully started oil production in Sepanjang Islands at the volume of 9,000 barrel per day (generating cash of USD450,000/day). These evenly announcements have resulted in stable price of Energi shares at Rp500. What an odd world we livin! When many people could only count losses, small number of people still manage to calculate the benefits!

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Lapindo to Freehold, hold on!

I bet the following information would add more confusions. Today PT Energi Mega Persada (EMP) Tbk disclosed the selling price of Lapindo Brantas Inc to Freehold Group is US$1 million. Compare that with USD2 when it plans to sell to Bakrie Oil. No explanation why now USD1 million. But the following might answer that.

Under the sales & purchase agreement with Freehold (BVI), EMP has no right over-riding-royalty interest, no exclusive right to buyback the shares of KEL and PAN which control Lapindo Brantas Inc, no option to buyback KEL & PAN, and no obligation to provide technical assistance to buyer.
The SPA with Freehold, controlled by Singapore-registered Alsace Pte Ltd, set EMP free from any claim or charges, including those related to Banjarpanji mudflow in Sidoarjo, East Java. Nice!
When asked by JSX what is the relationship between Minarak Labuan Co (L) Ltd, a vehicle company owned by Bakrie, and the divestment of KEL & PAN to Freehold, EMP didn't clearly answer that. JSX asked that because Minarak stated last week that it had committed to provide funds needed by Lapindo Brantas to serve its obligation under Presidential Decree No. 13/2006.
If we should believe in EMP's statements that no relationship between Freehold and Bakrie, we must say that Minarak Labuan is a generous company. It's strange as well to understand why would someone want to invest USD1 million only to take other people's responsibility which could cost hundreds of million USD?
Asked about who will take the responsibility over the mudflow, EMP said it should be shared by three companies (Lapindo, Medco, and Santos) based on operating agreement signed in 1992. Lapindo owns 50% working interest in the Brantas PSC, with Medco and Santos hold 32% and 18% respectively. Medco declined to take the responsibility and filed Lapindo to International Arbitration Body in New York instead.

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