JAKARTA. PT Bumi Resources Tbk (BUMI) is processing a divestment of Gallo Oil (Jersey) Ltd, which is located in Yaman. BUMI has made the decision, on the grounds that Gallo has yet to make profits since it was acquired by BUMI in 1999.
According to the President Director of BUMI Ari S Hudaya , BUMI cannot take further steps to save Gallo Oil, due to the continuous geopolitical problems in that country. Therefore, BUMI finally decided to offer its participation rights. Actually, BUMI had stopped the production activities since the last year due to the lack of certainties. “We are processing the divestment,” Ari said, Thursday (23/2).
Of course, BUMI has been suffering great losses, on the grounds the asset has never made profit. The losses were mostly driven by the exploration costs, which amounted to US$ 300 million.
BUMI took over Gallo Oil after this company issued new rights as many as 18.61 billion. At that time, the corporate action caused a dilution effect up until 95.92%. The standby buyer of the corporate action was Long Haul Holdings Ltd. However, apparently, the rights issue was less attractive, as BUMI could only sell 100 shares.
As the consequence, Long Haul bought up 14.34 billion shares worth Rp 7.17 trillion, while the rests 4.27 billion shares worth Rp 2.13 trillion were taken over by Minarak Labuan Co Ltd. Therefore, BUMI obtained Rp 9.31 trillion from the rights issue.
However, BUMI could only obtain the cash funds as much as Rp 60 billion, while the rests of Rp 9.25 trillion were paid under the form of Gallo Oil shares. Larer, it was found that the owners Gallo Oil, namely Long Haul and Minarak Labuan had agreed to sell Gallo Oil to BUMI in 21 October 1999. At that time, BUMI had released the promissory note worth Rp 9.25 trillion.
Therefore, as per the end of December 2000 Long Haul had become the owner of 73.01% of BUMI’s shares. Meanwhile, Minarak Labuan controlled 21.99% the shares of BUMI. Long Haul is affiliated to Bakrie Group through Bumi Plc, and so is Minarak Labuan Co Ltd.
Ari explained, actually BUMI had once found gas reserves at about 10 trillion cubic feet (TCF). However, BUMI had no way to conduct the exploration, due to the continuous war in that country.
Ari added, the losses made by Gallo Oil will be considered as the impairment loss.
Analyst at BCA Sekuritas Aditya Eka Perkasa estimates, after restructuring debts, BUMI has a chance to improve its corporate governance, on the grounds that the creditors will hold some positions at the director and commissioner levels in that company. Aditya continued, as the largest coal producer in Indonesia, the share price of BUMI is relatively inexpensive. The shares of BUMI were transacted with the PE of 10.6 times, while the PE of the overall coal industry was 14.5 times. (Muhammad Farid/Translator)
