Mandiri to lend Bumi

Mandiri to lend Bumi $100m to buy Arutmin

JP/ /

Bloomberg Jakarta

PT Bank Mandiri plans to lend US$100 million to PT Bumi Resources to help the latter buy 80 percent of coal miner PT Arutmin Indonesia.

The acquisition is part of Bumi's plan to switch its focus to mining and energy from property. Bumi plans to seek shareholders' approval for the Arutmin buyout on Thursday.

"It's a good project," said Keat Lee, Bank Mandiri's chief financial officer. "The condition on the loan is that Bank Mandiri holds the Arutmin project as the collateral."

Bumi is hoping that the purchase of Arutmin will help it make a profit of Rp 321 billion ($30.9 million) this year. Before the acquisition, Bumi forecast that it would incur a loss of 9.62 billion rupiah in the year ending December.

The company plans to spend $148.5 million buying 80 percent of Arutmin from Australia's BHP Billiton and to acquire the rest from Indonesia's Bakrie Group for about $37 million.

"We will use a bank loan and equity money" from investors to "buy the whole stake of Arutmin," said Eddie Soebari, Bumi's president.

Bumi is likely to form a separate company to use the Bank Mandiri loan and the funds from investors to buy Arutmin, bankers said.

The new company is expected to buy the 80 percent of Arutmin from BHP Billiton in cash while the remaining 20 percent stake from Bakrie Brothers will be paid for with $7 million in cash and five monthly installments, bankers said.

Bumi was owned by PT Bakrie & Brothers before it gave up its majority stake to a foreign company after a rights offer in February 2000. Bakrie's stake in Bumi is now insignificant.

Bumi shares rose Rp 5, or 10 percent, to Rp 55 in recent trading on the Jakarta Stock Exchange.