Bumi Resources may sell subsidiary to pay off debt

BUMI Resources may sell a subsidiary and conduct a rights offer as part of a plan to accelerate debt repayment, company executives said yesterday.

Indonesia’s biggest exporter of thermal coal was considering a sale of Fajar Bumi Sakti, corporate secretary Dileep Srivastava said at a briefing in Jakarta, after the Indonesia stock exchange directed it and Berau Coal Energy to hold public presentations on their finances amid a probe initiated by London-listed Bumi Plc. Bumi Resources may sell shares, president director Ari Hudaya said at the briefing.

Bumi Plc, founded by Nathaniel Rothschild and owner of 29% of the Jakartabased miner, said last Monday it was investigating “potential financial and other irregularities” and hired lawyers to look into a $637m write-down of development funds and exploration assets. Moody’s Investors Service changed its outlook on Bumi Resources to negative from stable last Tuesday.

Bumi Resources was unclear of news of the investigation and had always abided by Indonesian rules, Mr Srivastava said.

Berau Coal Energy had not been informed of nor involved by Bumi Plc in an investigation of Berau Coal, its president director Rosan P Roeslani said at a separate press conference.

Bumi shares fell 2.7% to 710 rupiah (7.4 US cents) apiece at the close in Jakarta, erasing an earlier advance of 5.5%. The stock has plunged 68% this year, compared with the 12% gain on the benchmark Jakarta index. Bumi Plc advanced as much as 13% in London.

The investigation would focus on “extensive” development funds at Bumi Resources and an asset at Berau Coal Energy, another coal holding, which were marked down to zero in the accounts of Bumi Plc as of December 31, Bumi Plc said. It gave no figures for the write-down at that time. The probe is the latest turn in a dispute involving Mr Rothschild and Indonesia’s Bakrie family since they agreed to a $3bn deal in 2010.

Relations between Mr Rothschild and Bumi co-chairman Indra Bakrie soured last year after the UK-based financier made public a letter to then-CEO Ari Hudaya urging a “radical cleaning up” of Bumi Resources. Bloomberg