Bumi to issue US$600m in bonds

Leony Aurora, The Jakarta Post/Jakarta

Indonesia's largest coal exporter, PT Bumi Resources, plans to issue US$600 million-worth of bonds later this year to refinance its debts, says a top company executive.

The proceeds would be used to repay the debts of Bumi subsidiaries PT Arutmin and PT Kaltim Prima Coal (KPC) to Credit Suisse First Boston, United Overseas Bank and several local banks, finance director Eddie Soebari told reporters on the sidelines of the Indonesian Capital Markets Seminar and Expo here on Friday.

The interest on the debts was four percentage points higher than the three-month London Interbank Offered Rate (Libor).

"We hope to get a better deal," said Eddie. Following refinancing, the company expected to cut its interest between 6 percent and 7 percent.

One of the financial advisors assisting with the U.S. dollar- denominated bond issue is Merryl Linch.

Coal miner KPC secured a $385 million loan from a syndicate of banks, including Indonesia's Bank Mandiri, led by the Malaysia and Thai offices of Credit Suisse First Boston (CSFB) last year to refinance its debts.

KPC contributed between 70 percent and 80 percent of Bumi's revenues last year, said Eddie.

He further said that Bumi's total coal production this year would grow by between 20 percent and 23 percent. Coal output was estimated at 40 million tons last year.

The company'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, controlling more than 6 percent of thermal coal supply on the international market.

Two years prior to acquiring KPC, Bumi bought an 80 percent stake in another coal producer, Arutmin, which operates mines in South Kalimantan, from Australia-based BHP Billiton.

In previous reports, Bumi has estimated that the average price of coal in 2005 will rise by almost 9 percent due to stronger demand from China and India.

Following China's move to reduce coal exports to accommodate growing domestic demand with more power plants being constructed, the price of the coal sold by Bumi increased to an average of $35 per ton last year from $25.5 per ton in the previous year.

Bumi's customers include China, India, Taiwan, Hong Kong, Malaysia, Japan and the United States.