Bakrie companies see revenues decline

JAKARTA. Two companies related to the Bakrie family — PT Bakrie Sumatera Plantations (UNSP) and PT Bumi Resources (BUMI) — were in the news on Tuesday with reports of profit decline and credit rating downgrade.

Meanwhile, another company PT Energi Mega Persada (ENRG) is planning for a rights issue.

Bakrie Sumatera, a plantation company, reported a significant loss in the first quarter of the year. In an overdue report submitted to the Indonesia Stock Exchange (IDX), UNSP recorded Rp 481.3 billion (US$46.6 million) of revenue in the first quarter, a steep drop from Rp 855.3 billion in the same period of 2012.

Like other crude palm oil (CPO) producers, UNSP is feeling the impact of a declining price due to the global economic slowdown. The company did not release its selling price in the first quarter.

The revenue decline and the Rp 11.69 billion in losses from discontinued operations made UNSP book Rp 63.38 billion in net loss, a setback compared to Rp 84.07 billion in net profit the same period last year.

According to its financial report, the loss from discontinued operations was due to UNSP’s plan to sell the assets of six subsidiaries, namely PT Jambi Agrowijaya, PT Eramitra Agrolestari, PT Trimitra Sumberperkasa, PT Multrada Multi Maju, PT Padang Bolak Jaya and PT Perjapin Prima.

The companies signed the selling agreements with third parties on Dec. 18, 2012, they are still being processed.

The financial report showed that the subsidiaries received $29.61 million in payment from the selling of assets.

Meanwhile, BUMI, the country’s largest miner, saw its corporate family and senior secured bond rating downgraded by Moody’s to “Caa1” (poor quality and very high risk) from “B3” (speculative and high risk).

According to Moody’s, BUMI have a number of debts due to mature in the second half of 2014, including $375 million of convertible bonds, $150 million loans from China Development Bank and a $600 million loan from China Investment Corporation (CIC).

The company’s cash balance was only $90 million, Moody’s said.

“The downgrade reflects the increased refinancing risk for Bumi Resources. The deadline in August — for the refinancing of the $150 million term loan — is less than a month away and the company has yet to complete the potential monetization of its non-core assets,” says Simon Wong, a Moody’s vice president and senior credit officer.

BUMI has said it was planning to sell its non core assets, including its 87 percent owned diversified miner PT Bumi Resources Minerals, to reduce the debt level. However, unclear progress has created uncertainty over its ability to pay the debts.

Declining coal prices are also a challenge for the company.

“With the Newcastle coal price falling below $80 per ton in July and seaborne thermal coal supply continuing to outpace demand, the company’s selling prices are likely to remain correspondingly weak,” Moody’s said.

Meanwhile, the Bakrie’s oil and gas arm ENRG sent a notification to the bourse that it has called for an extraordinary general meeting of shareholders to seek approval for the company to perform a preemptive rights issuance.

The meeting is slated for Aug. 29. The company has not disclosed how much it wanted to offer in the
rights issue.

“Funds from the planned preemptive rights issuance will be used to acquire oil and gas block[s], which is [are] already in production,” ENRG head of investor relations Herwin Hidayat said in a text message on Tuesday.

He declined to reveal how many shares the company would offload and only said that a further announcement would be made in due course.

ENRG recently sold 10 percent new shares and obtained Rp 405 billion, which was used for business expansions and working capital. (Raras Cahyafitri)