Glencore, the world's biggest commodities trader, is expected to sign a deal within days for a $800m (£508m) loan to Indonesia's Bakrie Group to help it refinance a $1.35bn facility that became unexpectedly due, sources said on Thursday.
In return, Glencore will be given the right to sell more coal produced by Bakrie-controlled Bumi and the loan will be backed by part of the Bakrie Group's 47 per cent stake in the coal miner, said the sources, who have knowledge of the deal.
The deal will also give Glencore an option to turn the loan into an equity stake if Bakrie cannot repay the debt, one of the sources said. The sources declined to be identified because the talks were not public.
The sale or marketing rights could be extended to other Bakrie non-coal assets such as for zinc from Bumi Resources Minerals (BRMS.JK), one of the sources said.
Glencore, several of whose executives are in Jakarta to help close the deal, has been seen as a frontrunner and likely partner for the Bakries since news of the refinancing talks emerged last week, with analysts pointing to its relationship with the family and existing coal marketing agreements.
The deal would tighten Glencore's grip on coal sales from Indonesia, the world's largest thermal coal exporter.
Shares in Jakarta-listed Bumi Resources, Asia's largest thermal coal exporter, jumped as much as 5.8 pe rcent on the news, outperforming the Jakarta index .JKSE, which was up 1.5 per cent.
The Indonesian group has held re-financing talks on the debt after mandatory repayment of the loan – a one-year deal arranged by Credit Suisse in March to consolidate Bakrie family debts – was triggered by a sharp drop in Bumi's London shares that took the price below 850 pence last month, sources have said.
City A.M. Reporter