PT Bumi Resources Tbk (BUMI) and China Investment Corporation (CIC) are in talks for a possible debt swap.
A source familiar with the matter said the debt swap will take an opportunity of Bumi's issuing new shares without preemptive rights of maximum 10% or 1.94 billion of shares.
"Bumi will issue 1.94 billion of new shares to CIC, while it can convert the debt into the shares. Still, the biggest stumbling block is conversion price," a source said.
Bumi has mandated PT Danatama Makmur which is run by Houston Jusuf to handle such corporate action. "I hear that Bumi and CIC seem agreed conversion price is around Rp2,700-Rp2,800 per share."
If they reach it, Bumi's debt will shrink by Rp5.43 trillion from around US$1.9 billion. In September, CIC provided high interest loan of US$1.9 billion to Bumi.
Coinciding with the negotiation, Bumi is offering joint action to Huaneng Power International to buy 90% interest in PT Berau Coal, fifth largest coal mining in Indonesia. "CIC will buy Bumi new shares, while Huaneng is goint to participate in Berau Coal deal as a back-up partner for PT Recapital Advisors." a source said.
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