BUMI shareholders green-light rights issue

JAKARTA. Shareholders of Indonesia’s largest coal producer PT Bumi Resources (BUMI) have approved the company’s plan to raise up to Rp 8 trillion (US$672.5 million) by offering its rights shares to pay off its numerous debts.

The decision was achieved after the vote received a 56.30 percent quorum. Initially, the threshold was set by the Financial Services Authority (OJK) at 75 percent, but due to there not being a change in the statute, the attendance threshold was lowered to 66 percent of shareholders.

The vote approving the rights shares issuance in an extraordinary shareholders meeting was delayed by about five hours to 8 p.m. after the company’s annual shareholders meeting, which was scheduled at 2 p.m., resulting in a lower than expected attendance.

A 56.30 percent quorum was obtained during the meeting in favor of the rights issuance. Around 32.2 million shares, or 55.7 percent of the company’s enlarged stake, will be offered at Rp 250 per share.

Shares in Bumi traded at Rp 175 apiece on Tuesday following approval from the shareholders, up 2.94 percent from the previous day.

Bumi expects to offer the new shares in September, corporate secretary Dileep Srivastava told reporters after the meeting. All of the proceeds will be used to pay the company’s debts, according to him.

Among the debts that the company needs to pay are the $150 million owed to the China Investment Corporation (CIC) through Country Forest Limited (CFL), the $150 million owed to Castleford Investment Holdings Ltd., and another $150 million that is part of the $375 million guaranteed convertible bonds.

Previously, the Bakrie family-owned company tried to secure approval from bondholders to change the maturity of the $375 million convertible bonds, which are due on Aug. 5 this year, or a month before the approved rights issue will be completed.

Bumi proposed to extend the maturity of the bonds to July 2021, lower the coupon rate to 7 percent from 9.25 percent and cut the conversion price to Rp 750, according to Bloomberg, citing a memo to a creditor dated June 5. However, it failed to secure a quorum at the bondholder meeting, which was held on June 20.

Bumi independent commissioner Anton Setianto Soedarsono evaluates that the approved rights issuance will likely improve the company’s work performance by covering up the debts that it owes.

“The price of coal is also improving, and will also give a positive outlook for the future,” he said after the shareholders meetings at the Gran Melia Hotel in Jakarta.

M. Saladdin, one of Bumi’s shareholders who approved of the rights issue, said the atmosphere inside the meeting was tense as several shareholders questioned the company’s decision to issue rights shares to solely cover its debts.

“But I understand they have no other choice. The increased price of coal is also of concern,” Saladdin told The Jakarta Post on Monday evening.

Bumi’s majority shareholder Long Haul Holdings Limited will take new shares that are unsubscribed to, equal to $150 million, and Castleford will absorb 6.9 billion new shares.

“The $150 million from Long Haul will be used to pay part of the debts to CFL. The share allocation to Castleford is for the conversion of the company’s debt into shares,” Bumi said in its previous statement.

PT Danatama Makmur is serving as a standby buyer, which will absorb up to 2.04 billion new shares. (dyl)