Bakrie Group members found solutions

Will be settled in the next year

Aside of UNSP, PT Bumi Resources Minerals Tbk (BRMS) have also found solutions to settle their debts to Credit Suisse. BRMS sold the shares of PT Newmont Nusa Tenggara that amounted to US$ 400 million to settle the debts.

Meanwhile, the Bakrie Group's investment company PT Bakrie & Brothers Tbk (Bakrie) also seek to gain the creditors approval in the next year. BNBR will restructure their debts by issuing a worth of Rp 1 trillion mandatory convertible bonds.

The rest of Rp 8 trillion debts will be partially restructured. The management of BNBR admitted that the creditor has accepted about 80% -90% of the restructuring proposal. One of the proposed options is to extend the maturity of debt or to change debt for shares.

Meanwhile, Bakrie Gorup’s property company PT Bakrieland Development Tbk (ELTY) targets a debt restructuring could be settled in March 2017. The restructuring includes p 3 trillion debt convertible bonds.

ELTY also plans to sell 38% of the shares of their subsidiary PT Graha Andrasentra Propertindo Tbk (JGLE) to settle the debt. But the debt settlement mechanism still needs approval, at least from the bondholders. Aside of selling the subsidiary’s shares, ELTY will also issue warrants or rights to buy shares or bonds at a specified price in order to increase revenues for the debt settlement. Analyst at First Asia Capital David Sutyanto said all issuers of Bakrie Group have big chances to resolve the debt problem.

However, the successful restructuring in 2017 does not necessarily automatically improve the performance of Bakrie’s issuers fundamentally. Therefore, the investors should look more closely at the sectoral conditions of each issuers. For an example, at this time, coal prices have started rising so that BUMI’s shares have better prospects in the next year.

Likewise, the increase in CPO price will enhance the UNSP’s performance. "As long as can focus on the upstream (business), the conditions will be better," he added. However, he warned that usually reverse stock will be responded negatively by the market.

Therefore, the price of UNSP shares may decline after the reverse stock. David still advised to remain cautious to penetrate to the shares of Bakrie Group. As the fundamentals of Bakrie Group issuers remain unhealthy, to date David only recommends ‘speculative buy’ for the shares of EARTH, BRMS and ENRG.

(Muhammad Farid/Translator)