INDONESIA’S Bakrie group has announced a $1bn (£626.5m) deal to sell half its stake in London-listed coal miner Bumi – its venture with Nat Rothschild (pictured) – to help tackle its debts.
The stake is being bought by Indonesian rival Borneo Lumbung Energi and will allow Bakrie to avoid a default on $1.35bn of loans after talks with commodities giant Glencore over a sale stalled.
Under the deal, which insiders said Rothschild welcomed, Bakrie Group will transfer its 47.6 per cent stake in Bumi to a 50-50 joint venture with Borneo.
The process is expected to be completed by the end of next month.
Bakrie will use the cash to pay off loans arranged by Credit Suisse.
Borneo Lumbung Energi is backed by Indonesian investor Samin Tan, a powerful figure in the country.
Talks between the Bakrie Group and Glencore fell through because lenders were not comfortable with the structure of the proposal, while the price was also seen to be an issue.
Bakrie group chairman Nirwan D Bakrie said: “In forming this partnership, Bakrie Group has strengthened its balance sheet and returned stability to its shareholding in its Indonesian listed flagship PT Bakrie & Brothers Tbk and in Bumi, also highlighting the intrinsic investment value in the LSE listed company.”
Tan, a former partner at accountant Deloitte, had failed in an attempt to buy a stake in 2006.
Meanwhile Bumi is to double its coal production over the next two years.
It was listed on the LSE in January this year.