London-listed Asia Resource Minerals’ announcement that the Bakrie
Group was short of funds for a planned buyback of coal miner Bumi
Resources, underscores the group’s financial difficulties, an analyst
said.
“Looking at the announcement, the main question from the market is, does the Bakrie Group have enough funding for the buyback?” said Reza Priyambada, head of research at Trust Securities in Jakarta.
“The next question is, how will they plug this shortfall?,” Reza said.
ARM, the coal producer formerly called Bumi Plc, on Thursday announced that the Bakrie Group was $65 million short for its planned exit from ARM and that the group wanted to revise the terms a week after it said it intended to complete the deal as scheduled.
Indonesia’s Bakrie family raised $163 million, less than the $228 million needed under the 2012 deal, ARM said earlier. This conflicts with comments by Bakrie spokesman Chris Fong in November, when he said funding had been available since January 2013 as a “direct cash investment” by the family. He couldn’t be reached for comment on Wednesday.
Reza from Trust Securities said investors are probably “used to” disappointment in any Bakrie-related deals by now.
Bumi Plc was established in 2011 when financier Nathaniel Rothschild agreed to buy stakes in two Indonesian coal producers, including the Bakries’ Bumi Resources. After the deal soured, a plan to unwind the investment stalled as the family sought financing.
The Bakries said last week that they were “intent” on exiting “on the same commercial terms as previously agreed.” At the same time, they cited “challenges” over the slump in Bumi Resources’ share price, down 52 percent in Jakarta since Oct. 10, 2012, a day before the split was announced in London.
The two-part transaction involves the family buying back 29.2 percent of Bumi Resources, the biggest Indonesian coal exporter, from ARM. Meanwhile, ARM’s chairman Samin Tan will buy 23.8 percent of ARM from the Bakries for $223 million.
An independent committee of ARM’s board believes the revision is not material and the deal is “clearly in the best interests of shareholders,” it said. The revised terms mean the Bakries will buy back 25.4 percent of Bumi Resources, leaving ARM with 3.8 percent.
Shares of Bumi Resources fell 1.5 percent to Rp 323 on Thursday. They had surged more than 7 percent on Tuesday after a director at the company said the Bakrie Group would complete the buyback on Thursday.
The post Bakrie Group reveals $65m shortfall in planned exit of ARM appeared first on The Jakarta Globe.
“Looking at the announcement, the main question from the market is, does the Bakrie Group have enough funding for the buyback?” said Reza Priyambada, head of research at Trust Securities in Jakarta.
“The next question is, how will they plug this shortfall?,” Reza said.
ARM, the coal producer formerly called Bumi Plc, on Thursday announced that the Bakrie Group was $65 million short for its planned exit from ARM and that the group wanted to revise the terms a week after it said it intended to complete the deal as scheduled.
Indonesia’s Bakrie family raised $163 million, less than the $228 million needed under the 2012 deal, ARM said earlier. This conflicts with comments by Bakrie spokesman Chris Fong in November, when he said funding had been available since January 2013 as a “direct cash investment” by the family. He couldn’t be reached for comment on Wednesday.
Reza from Trust Securities said investors are probably “used to” disappointment in any Bakrie-related deals by now.
Bumi Plc was established in 2011 when financier Nathaniel Rothschild agreed to buy stakes in two Indonesian coal producers, including the Bakries’ Bumi Resources. After the deal soured, a plan to unwind the investment stalled as the family sought financing.
The Bakries said last week that they were “intent” on exiting “on the same commercial terms as previously agreed.” At the same time, they cited “challenges” over the slump in Bumi Resources’ share price, down 52 percent in Jakarta since Oct. 10, 2012, a day before the split was announced in London.
The two-part transaction involves the family buying back 29.2 percent of Bumi Resources, the biggest Indonesian coal exporter, from ARM. Meanwhile, ARM’s chairman Samin Tan will buy 23.8 percent of ARM from the Bakries for $223 million.
An independent committee of ARM’s board believes the revision is not material and the deal is “clearly in the best interests of shareholders,” it said. The revised terms mean the Bakries will buy back 25.4 percent of Bumi Resources, leaving ARM with 3.8 percent.
Shares of Bumi Resources fell 1.5 percent to Rp 323 on Thursday. They had surged more than 7 percent on Tuesday after a director at the company said the Bakrie Group would complete the buyback on Thursday.
The post Bakrie Group reveals $65m shortfall in planned exit of ARM appeared first on The Jakarta Globe.
No comments:
Post a Comment