Glencore in Bakrie talks over shares

 
City A.M. Reporter
MINING giant Glencore is pressing the Bakrie group for more rights to sell coal and an option to buy shares in the Indonesian coal company Bumi, in exchange for refinancing a $1.34bn (£860m) short-term loan.

The mining giant, which has in the past come to the rescue of cash-strapped firms in exchange for equity stakes, is understood to be one of several parties in advanced talks with the Indonesian billionaire family.

The group is also understood to have held talks with private equity firm TPG-backed Northstar, who helped repay the group’s $1.4bn debt in 2008 following the collapse of its share price.

Shares in Bumi, Bakrie’s joint venture with Nat Rothschild, fell below 850p last week, triggering the mandatory repayment of the one-year loan arranged by Credit Suisse, due in March next year.

City AM sources said that the Bakrie family may choose to sell down its 47 per cent stake to around 29 per cent, which would then equal the total number of voting shares it owns in Bumi.

The Bakrie group is controlled by the family of Aburizal Bakrie, head of Indonesia’s biggest political party Golkar.

Glencore is viewed as the most likely partner due existing links with the family via a number of coal-marketing agreements and share swap arrangements.

Glencore declined to comment.

TIME LINE | BUMI

28 June 2010
Vallar, Nathaniel Rothschild’s investment vehicle, unveils plans to list on the London Stock Exchange and raise £600m to fund an acquisition in the mining sector.

9 July 2010
Vallar raises £707.2m in an initial public offering in London, beating its target.

16 November 2010
Vallar agrees on $3bn deal to buy 75 per cent of Berau Coal Energy and 25 per cent of Bumi Resources.

April 2011
Vallar completes the acquisition of Berau and lists on the London Stock Exchange under its new name Bumi plc.
17 August 2011
Bumi posts first half underlying earnings of $54m (£32m) and said production for the year was on track, expecting to produce 86m tonnes of coal this year, up from 77m.

4 October 2011
Bumi shares plunge by more than 12 per cent to 740p on doubts over their Indonesian subsidiary PT Bumi Resources’s debt-refinancing plan.

5 October 2011
The Bakrie group inform Bumi it is having to renegotiate a $1.34bn loan secured against their shareholding in Bumi after the firm’s shares fall under 850p, triggering a mandatory repayment. Shares close at 710p, half their highs of 1,400p in April.