BUMI needs to restructure its debts

JAKARTA. During the last two days, the price of BUMI’s share increased by 18% to IDR80 per a share. Indonesia Stock Exchange (IDX) has revoked suspension over BUMI on 4 October 2016. Previously, IDX imposed a suspension to BUMI on 1 July 2016, due to the delay in the release of BUMI financial report.

However, the increase in BUMI’s share price cannot cover the issuer’s fundamentals performance. Furthermore, the issuer of Bakrie Group experienced a US$2.18 billion of loses in 2015.

During the first semester of 2016, the divestment of 24% of Newmont Nusa Tenggara shares had reduced BUMI net loss from US$566.24 million in the first semester 2015 to US$11.8 million during the same period in 2016.

BUMI is now struggling to restructure debts. As an information, BUMI is now restructruring US$3.6 billion of US$9 billion of its debts that will mature within one year period. BUMI also has a US$374.7 million of convertible bonds that are included under short time liabilities.

According to Director and Corporate Secretary of BUMI Dileep Srivastava, BUMI’s performance deteriorated in 2015 due to the decrease in coal price. However, the issuer’s performance has improved in 2016.

BUMI expects to book an increase in the number of coal sales, from 79,3 million ton in 2015 to 85 million ton of coals in 2016.
BUMI’s performance has not returned to normal since 2008. BUMI’s share price once even dropped to the level of IDR50 per a share, or the lowest limit of share price in regular market.

Despite BUMI has been experiencing loss and deficiency during the recent years, the issuer has not yet been ousted from Jakarta Stock Exchange (IDX).
Chief of Executive of Stock Exchange Supervisor at Financial Service Authority (FSA) Nurhaida said that some issuers have experienced pressures on their business during the recent years.

On supervising, FSA stressed the information transparency. In order to prevent investors from risks, FSA encouraged issuers to provide transparent information in terms of improvement and deterioration.

Despite of the challenging situations faced by BUMI, some investors continue to trade the issuer’s share. The transaction volumes of BUMI’s shares hit 11.46 million lot and 7.8 million lot on Thursday (6/10) and Wednesday (5/10), respectively.

To date, BIMI has a negative US$3 billion of equities. “Buying shares with negative equity has high potential risks”, said analyst at First Asia Capital David Sutyanto. In this case, by purchasing shares with negative equities, investors actually buy worthless shares, David added.

Some investors once enjoyed the golden moment of BUMI so that they expect that the issuer may recover its performance into normal condition.
Director of Investa Sarana Mandiri Hans Kwee suggested investors to wait until BUMI settling its debt restructuring before deciding to buy its shares.

(Muhammad Farid/Translator)