Bumi sets 7.1% yield on $600m bonds sale
Leony Aurora, The Jakarta Post, Jakarta
The mining units of Indonesia's largest coal producer PT Bumi Resources have sold US$600 million of notes to finance their debts, the first corporate bonds to receive an investment grade from Fitch Ratings since the monetary crisis.
The bonds, issued on behalf of PT Kaltim Prima Coal (KPC) and PT Arutmin Indonesia, have a 7.13 percent yield and will mature in seven years, the company said in a statement released on Thursday.
The bulk of the bonds' proceeds would be used to pay all of KPC and Arutmin's debts.
The bonds are rated at BBB-, which is the lowest investment grade and four notches higher than Indonesia's sovereign rating of BB-, by the international rating agency.
Merrill Lynch, Pierce, Fenner & Smith Inc. acted as the sole structuring advisor and bookrunner. The company is working with PT Danatama Makmur as lead managers for this offering.
Last year, KPC secured a $385 million loan from a bank syndicate led by the Malaysia and Thailand office of Credit Suisse First Boston (CSFB) to refinance its debts.
The interest of the debts was four percentage points higher than the three-month London inter-bank offered rate (Libor).
Bumi's output rose after it bought KPC, which has mines in East Kalimantan, in October 2003. The acquisition of KPC turned Bumi into the country's largest coal producer, supplying more than 6 percent of thermal coal available in the international market.
Two years prior to acquiring KPC, Bumi bought 80 percent stake in Arutmin from Australia-based BHP Billiton. Arutmin has mines in South Kalimantan.
With energy sectors worldwide diversifying amid soaring international oil prices, coal prices have increased to a record high last year.
According to Bloomberg data, average coal prices sold by Bumi in the first quarter of this year rose to $38.6 a metric ton from an average of $31.8 a metric ton throughout 2004.
In the first three months of the year, Bumi recorded a 73 percent rise in net sales as compared to the same period in 2004 to Rp 3.07 trillion ($319 million).
Net profit from January to March more than quadrupled to Rp 446.7 billion compared with Rp 86.5 billion in the first three months of 2004.