PGN divestment closed at Rp11,350, behind the story

MSOE Sugiharto had finally decided to sell 185 million shares of PT PGN Tbk at Rp11,350, slightly above majority of submission at Rp11,300. As a result, the so-called Malaysia investor's offer at Rp12,000 dropped. What's up?

Bookbuilders (Danareksa, Bahana & Credit Suisse) had apparently met the 'investor' from Malaysia who wrote a letter to minister Sugiharto that he could buy PGN shares at Rp12,000 with closing date of transaction on December 22.
"But when we confronted him with some questions, he sais just ignore his letter to the minister and let's talk. He claimed that he has the money, but payment should be extended to two months," one investment banker involved in the transaction said.
The Malaysia investor has close friend HL, who is also the confidante of minister Sugiharto.
"Well, it looks good, but with the potential increase in share price in two months, you could easily suspect of something if you receive such offer," he further said.
But the Malaysian denied that. "The truth, brokerage firms hired by government asked as to put on the table last night at the amount of USD247 million while the mechanism is T+3," representative of the Malaysian I met this morning said.
"We have no connection with HL. We have direct relation with the minister himself," he said.
"I'm not surprised if later on you'll find Credit Suisse take all the benefits of this transaction. We told them that we have OSK behind us to support, not CIMB nor PNM, but they just didn't care," he complained.
When I asked him why not bought the shares in the market at cheaper price, he said, " because we know government will divest 5.31% shares and then we sent the offering letter last Thursday."
It means this guy got information from the ministry prior to the bookbuilding. The question, why the Malaysian guy didn't submit offer to bookbuilders?
"My analysis, Sugiharto's connection like AS mounts pressure like...see, Jamsostek and Malaysia's PNB are behind this investor, so you better entertain them. But if the guy is a qualified investor, he should have submitted the offer to bookbuilders, not to Sugiharto," an analyst said.
Hm...interesting. Let's wait what Sugiharto will say this afternoon.
Antara quoted M Said Didu, secretary to the ministry of SOEs, saying the Rp11,350/share already a record for Indonesia because this is the first time such divestment got premium price. He should read archives!

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PGN divestment turns sweet & sour for Sugiharto

After more than one year of suspension, government finally divests 185.8 million shares of PT Perusahaan Gas Negara (PGN) Tbk, represents 5.31% outstanding shares, through bookbuilding process handled by Danareksa, Bahana, and Credit Suisse on Thursday.

The state-owned investment bank received huge demand from investors with 1.9 times of amount of shares on sale with average price of Rp11.300 per share, even though government actually offered 5% discount from Tuesday's closing. But things changed quickly when one investor, reportedly from Malaysia, submitted an offer to buy the whole shares at Rp12,150 which is 7% premium.
It was 3PM on Thursday. Danareksa stunned with the information because this 'ghost' investor was said to have direct deal with officers at the state-owned enterprises ministry.
"The bookrunners then start to ask who the hell is the guy. We're confused because if we quote the price at Rp11,300 while public get the information that someone actually offered better price for the government, we'll be under public pressure. But if we sell all the shares to that 'ghost' investor, the question is what kind of deal he/she has with the ministry," a dealer at Danareksa said.
"I'm not surprised if the Malaysian investor is the one with under-the-table agreement with certain officers. Or may be there is no Malaysian investor, but a proxy investor," said an investment banker in Jakarta.
"We're quite suspicious with the transaction. We even heard the so-called Malaysian investor was ready to buy at Rp14,000/share. But you know, it's just too good to be true," a Tempo editor said.
But the Rp11.300 is clearly not the best price. It reflects almost 17% discount from PGN's highest price this year. Politicians have something to play, especially those who want to mount pressure toward Sugiharto.
Kompas in its Friday edition quoted two legislators from PAN, Drajad Wibowo & Didiek J. Rachbini, criticizing government's failure to get the best price. They called it too low, too slow.
At the same time, these guys indirectly defended Sugiharto calling the divestment shown poor coordination about privatization and the intention behind it, which is merely to fill budget gap (this year's target is Rp3 trillion from privatization).
"Sugiharto might be blamed or charged for potential loss to the state and it's a corruption, but he could defend himself saying he sell PGN to meet the target set under the 2006 budget law and blame his colleagues in the cabinet. Blame games," a political analyst said.
This is big game. Those who have information about when Sugiharto will push the button might have bought PGN shares at very low price in the last few months and get the upside.
"The shares must have been swept at cheap price, and will get huge amount from the upside once Sugiharto push the button," other investment banker said.
That's a conspiracy theory. JSX suspended PGN shares trading on Wednesday. Prior to the placement, government controls 59.357% shares of PGN. The second largest shareholder is RS + Co International Ltd at 8.843%.

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KPC & Arutmin divestment

Bisnis Indonesia reported today that five investors are competing to acquire 30% shares of PT Bumi Resources Tbk coal mining subsidiaries of PT Kaltim Prima Coal and PT Arutmin Indonesia. Who are they?

Bumi management declined to disclose the names, only that they are from Japan & Australia. Credit Suisse is the coordinator for the divestment.
The price? The management didn't clearly disclose how much proceed they expect from the divestment. But the paper quoted an analyst that the price assumption is somewhat similar with the US$3.2 billion collapsed deal between Bumi and Renaissance Capital which translates to US$1 billion for 30% shares of KPC & Arutmin.
What to do with the money? To pay the debts (Bumi?) plus dividend (if any?).
The major problem with Bumi's corporate actions is the huge gap between the announced plan and reality. They simply forget the general belief that actions speak louder than words!

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Indosiar is for sale

To confirm my earlier reports, media published several statements from Indosiar management in the last few days about the possibility of other companies to acquire the ailing TV station previously controlled by Salim Group.

Indosiar is currently controlled by PT Indosiar Karya Media (IDKM) Tbk, listed at JSX. IDKM itself is owned by PT TDM Aset Manajemen (28.02%), PT Prima Visualindo SA C/F Credit Suisse Singapore (27.3%). Trimegah & Windsor also hold IDKM warrants 9% respectively.
In a report to JSX late last week, IDKM confirmed media reports that the company want to pay bonds due 2008 with bank loans (refinancing), rights issue, or the combination of both methods.
TransTV, controlled by Salim's business partner Chairul Tandjung, is said to acquire Indosiar. TransTV had previously acquired 50% shares in another ailing TV station, TV7, with the remains controlled by Jacob Oetama (Kompas Gramedia Group)

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Credit Suisse provides US$300 million loan to Bumi subsidiary

Credit Suisse has agreed to provide up to US$300 million loan to Enercoal Resources Pte Ltd, a subsidiary of PT Bumi Resources Tbk. The one-year facility will then be loaned further to Bumi Resources to finance working capital with Bumi's rupiah and USD bank accounts plus Enercoal accounts as collaterals.

No details available on the interest rate charged. Bumi is currently busy to buyback up to 1.9 billion shares with maximum purhasing price of Rp1,200/share. Bumi reported buyback of 16 million shares early this week at Rp760/share.

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Bumi gets US$1.2bn financing, oversubscribed?

PT Bumi Resources Tbk announced yesterday the closing of US$1.2 billion facility arranged by Credit Suisse, claiming the oversubscription on US$300 million three-year loan.

Bumi closed the sles of US$900 million floating rate notes due 2011 and 2012 by Indocoal Exports (Cayman) Limited to refinance the US$800 million fixed rate notes due 2006 and other corporate expenses. The notes were issued in two tranches, Class A-1 in US$600 million which matures Sept 2011 and carries interest rate of one-month LIBOR plus 3.25% and Class A-2 in US$300 million which matures 2012 carries LIBOR + 5% interest.
Bumi also announced that it has closed an oversubscribed syndication on a US$300 million loan facility with a three-year term at undisclosed interest rate.

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Bumi new loan downsized to US$900 million

PT Bumi Resources Tbk is pushed to downsize the amount of loan raised by Credit Suisse to US$900 million, but looking for mezzanine facility of US$300 million to make it US$1.2 billion.

Source at Bumi Resources said the US$900 million facility would be consisted of US$600 million 5-year and US$300 million y-year loans. Then to meet the demand (US$1.2 billion, of which US$805 million refinancing and the remaining for working capital), Bumi is looking for Mezzanine facility of US$300 million.
Bumi is expected to announce the fund raising result this afternoon. Interest rates are believed to be higher.

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Bumi new loan downsized to US$900 million

PT Bumi Resources Tbk is pushed to downsize the amount of loan raised by Credit Suisse to US$900 million, but looking for mezzanine facility of US$300 million to make it US$1.2 billion.

Source at Bumi said the US$900 million facility would be consisted of US$600 million 5-year and US$300 million y-year loans. Then to meet the demand (US$1.2 billion, of which US$805 million refinancing and the remaining for working capital), Bumi is looking for Mezzanine facility of US$300 million.
Bumi is expected to announce the fund raising result this afternoon. Interest rates are believed to be higher.

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Bumi deal screwed you up?

JSX asked PT Bumi Resources Tbk of whether the announced US$3.25 billion acquisition price of its assets by PT Borneo Lumbung Energi-Renaissance Capital was the final price? JSX raised the question, investors as well, because Bumi called the collapse of the deal mainly due to disagreement on the final acquisition price.
No clear-cut explanation from both Bumi and Renaissance. But let me give you the likely answer.

The purchase consideration of coal companies (KPC, Arutmin & Indocoal) was US$3.25 billion on debt-free basis, subject to further adjustments, which were expected in May (when Credit Suisse launch the US$2.1 billion fund raising) to amount to approximately US$250 million.
So, in many documents, the expected final price was US$3 billion (excluding US$100 million for working capital & transaction costs). That was early May. Financing plan was then based on the US$3.1 billion cost. The source of funds: US$1 billion of equity from Borneo (consisted of US$300 million plus US$700 million of Borneo Notes issued to UOB) and US$2.1 billion debt to be raised by Credit Suisse (consisted of US$1.1 billion senior notes and US$500 million junior notes).
So, some people (mainly advisors & lenders/investors in Credit Suisse deal) have been aware of the US$3 billion price (max) to be paid to Bumi shareholders. Borneo was reportedly deposited nonrefundable US$120 million down-payment (even though recently Bumi announced the fund would be returned to Borneo).
Under the SPA between Bumi & Borneo, Bumi was also obliged to repay all outstanding indebtedness owed by the coal companies and part of purchase consideration will be used by Bumi to discharge loans owed by Bumi to each of Mitsubishi, Glencore, and PAMA.
And for the transferred rights and obligations, novation was needed of marketing advisory contracts with Mitsubishi & Glencore and consulting deed with PAMA. Condition precedents were: (1) shareholders' approval (obtained in May 17), (2) consents required under the CCOWs or from relevant Indonesian government bodies, and (3) no events of defaults under existing financing documents.
But later of the month, investors got information that buyer was expecting final price of US$2.7 billion to US$2.8 billion which equals to US$400 million to US$500 million adjustment from the purchase consideration. Why? The buyer seems realized the real value of coal assets were not as high as expected combined with difficulties to raise enough funds in the equity capital side.
The expected closing period of the deal failed to materialize in late June as a result. In that month, director general of coal of the energy ministry sent a letter of default on royalties payment at KPC. Tax office is also reportedly sent two warning letters to KPC on unpaid taxes amount to US$40 million. The stories on Bumi's EBITDA for first half below analyst expectations also put more pressure on buyer, lender, and investors. In May, Credit Suisse told investors (when it launch US$2.1 billion financing) that estimated EBITDA for coal companies in 2006 at US$583 million. But in July, investors got the information of well-below epectations EBITDA of only US$118 million at KPC and Arutmin.
Confronting all the problems, the buyer (under pressure from potential lenders) cut further the price offered to unknown exact figure even though some says at US$2.5 billion as the final price (after the adjustments). Some even says at US$2.2 billion to US$2.3 billion.
Apart of the deal, Bumi announced various initiatives including its claim to work with South Africa's SASOL to develop a multi-years-multi-billion dollar coal-to-liquid (CTL) business only to face SASOL's denial.

To be followed...

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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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Credit Suisse launch US$1.2 billion refinancing for Bumi

Credit Suisse launched US$1.1 bn to US$1.2 bn 5-year loan for Indocoal, a subsidiary of PT Bumi Resources Tbk, to refinancy the company's bridging loan of US$800 million mature late Sept and finance Bumi's program, including the share buyback. The new loan facility would be secured by coal export receivables of PT Kaltim Prima Coal and PT Arutmin Indonesia, both are coal mining subsidiaries of Bumi.

In April, Bumi Resources announced the closing of the sale of US$800 million 7% structured notes due July 2006 issued by Indocoal to refinance the redemption of US$600 million 7.134% notes due 2012 issued by Indocoal in July 2005. The Notes have been structured as financing bridge to the closing of Bumi's divestment of KPC, Arutmin, and Indocoal which collapsed this week.
But with EBITDA at KPC well below expectations in the first half 2006, the new loan might be a hard to sell stuff.

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Bumi 'Worthless' Resources

Below are comments of various investment bankers on the collapse of PT Bumi Resources Tbk US$3.2 billion divestment of KPC and Arutmin to PT Borneo Lumbung Energi.

Question: what kind of future Bumi would have?
Answer: Bumi has window of about two months to sell the coal assets at a lower price. After that, KPC operations will collapse and the coal assets will become unsellable. Then Bakrie group will have no more cash cow.
Q: Do you think someone would be able to buy the assets?
A: It's too overwhelming now. Someone should persuade 10 banks & hedge funds who are already inside the Credit Suisse First Boston (CSFB) US$800 million to roll into some kind of Mezzanine, bring in three or four banks to lend an additional US$600 million, and assemble another US$1 billion from several investors...
Q: Even so, that guy would face similar problems with Renaissance?
A: The buyer has to restructure the contracts with Thiess, PAMA, Glencore and Mitsubishi which are sucking out all the cash. It's all too much, nobody will consider it's worth all that pain and effort...
Q: But Bumi management said, they're gonna sell minority shareholding, continue the divestment to guys like Mitsubishi?
A: I don't think so. I think Bumi, again, trying to fabricate some positive news to lift the share price. They have nothing left to offer to Mitsubishi. Nothing left to offer anyone, except the whole thing in one go...
Q: So, what would happen with Bumi shares once JSX lift the trading suspension?
A: Guess yourself.
Q: By the way, what will happen with US$200 million Willow Finance Eschangeable Bond, exchangeable into majority shares of Bumi Resources shares in September mostly held by hedge funds? What will they do?
A: No idea. Tighten your seatbelt!

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Bumi-Energi, another promises

Bisnis Indonesia quoted Ari S. Hudaya, president director of PT Bumi Resources Tbk, saying it will pursue the buyback of 10% listed shares despite the collapse of US$3.2 billion divestment of subsidiaries.

Hudaya said the company is in talks with some investors for the next round of divestment process. The difference, this time Bumi would only divest minority shares at the coal subsidiaries. The company is also in talks with banks to finance the shares buyback.
Some newspapers also quoted directors of PT Energi Mega Persada Tbk saying the planned merger with Bumi would be implemented despite calls from stock market authority to review the plan following the collapse of Bumi-Borneo deal. Energi also announced the US$154 million funding from Credit Suisse to finance its oil and gas projects.
The market seems to react negatively to these promises. Lucky that suspension on Bumi shares trading is still in place. Look at Energi (ENRG) which dropped 8.7% to Rp520 on Monday's trading. The target price for merger was Rp870.

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Bumi Resources US$800 million refinancing

As I posted yesterday, the next move for PT Bumi Resources Tbk after the collapse of US$3.2 billion divestment of KPC, Arutmin and Indocoal is refinancing the US$800 million debt. Like the previous ones, Credit Suisse will arrange the new fund raising activity.

In April, Bumi Resources announced the closing of the sale of US$800 million 7% structured notes due July 2006 issued by Indocoal to refinance the redemption of US$600 million 7.134% notes due 2012 issued by Indocoal in July 2005. The Notes have been structured as financing bridge to the closing of Bumi's divestment of KPC, Arutmin, and Indocoal which collapsed this week.

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The Fall of US$3.2 bn coal deal: Blame on The Rain!

I like Milli Vanilli's song, a sweet memory of 1980s college years. The abnormal heavy rains in Kalimantan in the second quarter had a significant effect on the collapsed of what friends previously dubbed Deal of The Year. Another heavy rains in East Java would surely put more pressure on Energi Mega of visible flood at areas currently hit by mudflow from Lapindo Brantas. But there are so many factors beyond the rains.

"What do you mean with blaming the rain," a senior journalist asked me this afternoon.
"Well, the unusual heavy rain had cost lower production output at Arutmin. But it's a spin of the facts that the price had been too high. The question, why the price was so high. I suspect there was mark-up in the price," he further said.
"And then, where is Credit Suisse? Why such a big investment bank let them fooling people around. Where's the fiduciary responsibility," he asked.
Credit Suisse promised to raise US$2.1 billion to finance the US$3.2 billion deal. "They risk their credibility in the market," another journalist said.
Well, last month I posted an article about the deal has been on the verge of collapse when investors started to realize that the US$3.2 billion price tag was too high.
I met Samin Tan, president director of PT Renaissance Capital, and he asked me whether he was crazy. "You are," I answered.
"Let's see. I'm optimistic about the deal," Tan replied.
We exchanged SMS in the last few weeks about the deal until I realized that the deal had been collapsed for reasons I'm not sure still. "I'll get back to you about the reasons," Mr Tan wrote this morning after the whole world got the news.
"There are two groups at Bumi. Those who enjoy the current situation, keep the company under the existing shareholders for particular reasons, and those who want to move on with the divestment of KPC and Arutmin," an investment banker said.
"Bakrie family seems in a hurry of something and they may not get the same 'lucrative' offer," an analyst called.
Bumi Resources is considered of committing public lies on the transaction. "By law, probably there is no violation. This is just unethical and showing the inconsistency of Bakrie Group," Edwin Sinaga, analyst at Kuo Capital said.
Bumi immediately reiterated its plan to move on the merger plan with Energi Mega Persada, but both Capital Market Supervisory Board (Bapepam) and JSX said the plan should be reviewed significantly.
Suspension of Bumi shares trading would be sustained, JSX said. But suspension on Energi shares trading could be lifted earlier.

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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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No deal yet, Bumi postpone shareholders meeting

PT Bumi Resources Tbk told JSX Monday that extraordinary shareholders meeting which was initially scheduled this Friday (July 28) is postponed to September 19 for undisclosed reason.
The meeting is expected to decide the merger plan with PT Energi Mega Persada Tbk. But the uncertainty over the closing of US$3.2 billion acquisition of two Bumi subsidiaries (KPC & Arutmin Indonesia) by Borneo Lumbung Energi is believed to be the main reason behind the postponement.
Borneo-Bumi deal is pending on consent letters from Thiess as contractor & Mitsui as equipment leasing agent for KPC & Arutmin. Thiess is the main contractor of both coal companies which secured life-of-the mine contract (Aus$1.7 billion). So far, no letter of consent given from Thiess and Mitsui.
Borneo had secured financing for the acquisition, of which US$2.1 billion raised by Credit Suisse.
On the other hand, Energi Mega is facing its own problem on unstoppable hot mudflow disaster from Lapindo Brantas drilling activity in Porong, East Java. Lapindo has 50% working interest in Brantas PSC, one of EMP's key assets which contribute almost 40% of the company's revenue from natural gas operation. Investigations are underway, with civil & criminal charges, and these may lead to the termination of Lapindo's operation.

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Borneo trying to get Marubeni on board

PT Borneo Lumbung Energi is apparently trying to get Marubeni Corporation on board of the US$3,25 billion acquisition of two coal mining assets from PT Bumi Resources Tbk.

"Senior officers of Renaissance Capital is in Tokyo to get Marubeni on board," said people close to the deal. Renaissance Capital's Samin Tan is the majority owner of Borneo Lumbung which supposedly close the deal last Friday.
No explanation on why Borneo failed to close the deal despite rumors of financing and legal issues.
"Lawyers are still fighting on each other," the executive said over the weekend.
It's not clear what subject they're fighting for. "But creditors and investors are worried about some life-time contracts with the mining subsidiaries. Besides they impose some conditions to make sure the cashflow management will secure the interest payments," he said.
Samin Tan dismissed speculation of financing difficulties last week saying Credit Suisse had raised the necessary US$2.1 billion loan and Singapore's UOB would provide US$700 million exchangeable bond.
It's the bond that Marubeni is being offered to. "It's not easy to sell bond at the moment," the executive said.
The loan being arranged by Credit Suisse will include US$1 billion over five years, $600 million over six years, and $500 million from an eight-year mezzanine loan, which usually includes warrants that can be converted into equity.

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Borneo also failed to close Bumi deal

PT Borneo Lumbung Energi failed to close the US$3.25 billion deal to acquire two coal mining assets of PT Bumi Resources Tbk on the deadline set for Friday afternoon.

"It's not closed yet as the lawyers failed to settle the terms," people close to the deal said.
Borneo was confident to close the deal this week amid concerns of difficulties to raise enough funding for the acquisition. Borneo dismissed fears that Credit Suisse had been difficult to raise US$2.1 billion loans and equity part of the deal. Borneo stated early this week that Singapore's UOB agreed to provide 70% of the equity part of the deal through exchangeable bond facility.
Some says lawyers were bussy to accommodate the demand from creditors to secure interest payments with escrow account of cash proceeds from the operation of two mining companies---Kaltim Prima Coal and Arutmin Indonesia.
"Besides, there are existing agreements with mining contractors which are considered not supportive enough for securing payments to creditors," people familiar with the coal deal said.

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Income tax US$200 million from Borneo-Bumi deal

The US$3.2 billion acquisition of PT Bumi Resources Tbk's subsidiaries---PT Kaltim Prima Coal, PT Arutmin Indonesia, and PT Indocoal---by PT Borneo Lumbung Energi might give tax income of US$200 million to the state.

People at Tax Office said from tax point of view, the transaction give better deal to the state than if Borneo acquired Bumi Resources as the parent company through stock market which could give almost no income to the state.
The deal is expected to close on Friday with cash payment of US$3.25 billion of which Borneo raised US$2.1 billion debts through Credit Suisse and the remaining as equity (including equity financing of US$700 million from Singapore-based UOB).
Earlier this week, Bisnis Indonesia reported that Borneo planned to list its shares in stock market one year after the acquisition. Some investment bankers said Borneo is looking for a Singapore Stock Exchange listing.
How much the net proceeds Bumi would receive is unclear yet. But Bumi said in a letter to JSX yesterday that total cash proceeds would deducted or summed up with working capital reserves on the date of the SPA.
What to do with the cash proceeds?
First, Rp2.3 trillion for shares buyback (maximum 10% of listed shares).
Second, Rp3.8 trillion as cash dividend
Third, the rest for expansion and new projects including coal to liquid (CTL).

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