PT Bakrie offers Bumi Modern shares<\/p>\n
JAKARTA (JP): Financing company PT Bakrie Finance Corporation
\nsaid on Wednesday that it planned to swap part of its Rp 1.6
\ntrillion (US$197 million) debt for shares in its publicly listed
\naffiliate PT Bumi Modern.<\/p>\n
President of Bakrie Finance Mustafa I Jatim said that several
\ncreditors had given their initial agreement for the debt-to-
\nequity-and-assets swap proposal.<\/p>\n
"Some creditors preferred settling Bakrie's debt through Bumi
\nModern's shares instead of having to exercise their rights to
\nseize Bakrie's assets," Mustafa said during a media briefing at
\nthe Jakarta Stock Exchange.<\/p>\n
Bumi Modern, a tourism, hotel and oil concern, is a subsidiary
\nof Bakrie Finance's parent company PT Bakrie Capital Indonesia.<\/p>\n
Under the complicated debt restructuring proposal, Bakrie
\nFinance plans to pay part of its debt or about Rp 915 billion
\nwith its claims on third parties.<\/p>\n
Mustafa said that because the claims had been taken over by
\nparent company PT Bakrie Capital Indonesia, the latter would be
\nresponsible for paying the Rp 915 billion debt by issuing
\nconvertible bonds for the same amount to Bakrie Finance's
\ncreditors.<\/p>\n
He said that the bonds would be converted into Bumi Modern
\nshares.<\/p>\n
Bakrie Finance owes some Rp 434 billion to 13 domestic
\ncreditors, some of which have been taken over by the Indonesian
\nBank Restructuring Agency (IBRA), and another Rp 42 billion to
\nsix affiliated creditors.<\/p>\n
He said that the creditors preferred to accept Bumi Modern's
\nshares because this presented a better alternative to the other
\nassets belonging to Bakrie Finance.<\/p>\n
"We have assets spread all over the country. I am not kidding
\nif I tell you that we have tractors in South Kalimantan and even
\nin Irian Jaya," he said.<\/p>\n
The creditors also based their choice on the recommendation
\nfor a debt-to-equity-and-assets swap given by auditor
\nPricewaterHouseCoopers, which conducted a due diligence on Bakrie
\nat the latter's request.<\/p>\n
Mustafa said that Bakrie Finance's foreign debt amounted to
\nbetween $120 million and $130 million or the equivalent of Rp
\n1.14 trillion.<\/p>\n
The company last month survived a bankruptcy petition brought
\nby four Hong-Kong based creditors after the Supreme Court
\noverruled its earlier decision that declared Bakrie Finance
\nbankrupt.<\/p>\n
Mustafa said that the company was offering creditors its
\nentire assets to pay its remaining debts of about Rp 685 billion.<\/p>\n
"A creditor may ask for one tractor, one ship and shares worth
\nUS$1 million," he told The Jakarta Post.<\/p>\n
He said that the company expected to hold a meeting with its
\ncreditors by the end of this month or in September to establish
\nthe term of reference for initial approval of the debt-to-equity
\n-and-assets swap.<\/p>\n
Bumi Modern's rights issue earlier this year was shrouded in
\ncontroversy when it raised some Rp 9 trillion to acquire oil
\ncompany Gallo Oil Ltd of the United Kingdom.<\/p>\n
Analysts questioned the plan as Bumi Modern's total assets
\nconstituted only about five percent of the rights issue proceeds.<\/p>\n
Furthermore, Gallo Oil is owned by a company linked to
\nbusinessman Aburizal Bakrie, the majority shareholder of Bumi
\nModern.<\/p>\n
Analyst Lin Che Wei has said that the acquisition of the oil
\ncompany was a ploy to transfer its assets into liquid securities
\nthrough "manipulated pricing" on the JSX.<\/p>\n
According to him, Bakrie would then be better placed to pay
\nits debts using its Bumi Modern assets, whose book value inflated
\nfollowing the acquisition.(bkm)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/pt-bakrie-offers-bumi-modern-shares-1447893297",
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"sponsor_url": "https:\/\/okusiassociates.com"
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