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Dear valued readers

Starting on November 3 until 21, I will leave Jakarta and take a short course sponsored and endorsed by Inwent, Germany governmental organization, in Berlin. Following to that, London, UK is my upcoming visit to fulfill an invitation of Financial Times until end of November.

It is all about to understand and learn closely how ft.com is working as well as newspaper management.

In return, those knowledges are eventually to enrich both contents and language in our blog, emboldening readers to take investment decision. My team, Linda Silaen, is temporarily on her board to serve you with qualified rumours and fast information. We apologise for inconvenience.

PLN bonds set up 7.875% yield

Indonesian's state-owned electricity producer PT Perusahaan Listrik Negara (PLN) has set up 7.875% yield of its US denominated bonds and 7.75% coupon.

A source close to the deal said the company will sell US$1.25 billion bonds with maturity on January 20 2020.
PLN is one of Indonesia firms which has unveiled US dolar doniminated bonds, helped by Barclays Capital and UBS, to finance its power plant projects, following PT Indika Energy Tbk and PT Bukit Makmur Mandiri Utama.

Indika sold US$230 million of bonds, offering 9,75% yield, which was arranged by Citi, while Bukit Makmur launched US$315 million of bonds with 11.75% yield and helped by Barclays Capital, Deutsche Bank, ING, and Macquarie Securities.

Bumi to grasp US$500 million bonds

The darling coal miner for Bakrie Group PT Bumi Resources is going to enroll global debt market next week to sell US$500 million of guaranteed senior secured notes by its wholly owned subsidiary Bumi Capital Pte.

A source familiar with the matter said Bumi will initiate to offer US$500 million bonds to investor. The notes are upsizeable when a deluged demand is available.

Standard & Poor's Ratings Services today assigned BB rating to the proposed issue of the notes. Bumi is the largest producer and exporter of thermal coal in Indonesia. In 2008, Bumi produced over 25% of the country's total coal.
The ratings on the proposed notes reflect the irrevocable and unconditional guarantee by Bumi. The notes rank pari passu with other debt which primarily comprises convertible bonds and a US$1.9 billion loan from the China Investment Corp.

The issue rating is the same as Bumi's issuer credit rating of BB, as Standard & Poor's believes that the purely operational liabilities at Bumi's coal subsidiaries are unlikely to cause any structural subordination at Bumi, because of the company's strong mechanism to control cash flows.

The rating on Bumi reflects the company's exposure to regulatory risks. Bumi's coal mines are still exposed to Indonesia's evolving regulatory framework relating to taxation, contract mining and the environment.

Buma bonds provide 11.75% yield

PT Bukit Makmur Mandiri Utama (Buma) is selling US$315 million of five years bonds with an annual yield of 11.75%.

Buma, second biggest coal mining contractor in Indonesia after PT Pamapersada Nusantara, has set up banks loan of US$285 million with an annual interest rate of 6.9% as well. Barclays Capital is lead arranger for both bonds and loans.

DOID to divest 38% shares

PT Delta Dunia Makmur Tbk is planning to sell 2.58 billion of shares or 38% maximally in the upcoming private placement.

The company, which is underway to buy nearly 100% of the second biggest coal contractor PT Bukit Makmur Mandiri Utama (Buma), has set up an upsize option up to 980 million of shares or 14.43%. "The option will tap oversubscribed demand," said a note released today.

Delta Dunia, which is belong to Central Java-born business man Edy Suwarno who is close to Benny Tjokrosaputro, is going to buy Buma worth US$500 million. A private equity founded by Patrik Waluyo is set to steer around 40% of Delta Dunia.

CLSA is a global lead arranger for private placement, helped by Danareksa Sekuritas, Deutsche Securities, and Macquarie Securities. Assuming top price offering is Rp1.800, Delta Dunia's share holders is able to get Rp4.64 trillion (around US$400 million).

Medco to unveil US$300 million bonds

PT Medco Energi Internasional Tbk queues to unveil US$300 million of bonds soon after appointing debt sole arrangers.

A source familiar to that matter said last week saw a issue of request for proposal by a publicly listed oil and gas producer which is curbed by Panigoro family. "Medco is planning to hold a beauty contest to appoint bonds lead arrangers," a source said.

Fresh cash secured from debt issuance will be used by Medco to refinance notes matured next year. The company's debt notes of around US$300 million will due in May 2010.

Medco is one of six firms which are in line to enter global debts market. Currently, PT Bukit Makmur Mandiri Utama (Buma), which is being acquired by PT Delta Dunia Makmur Tbk, is underway to set up US$350 million bonds book building, while Delta Dunia is preparing to offer shares to investor.

Coinciding with Buma's book building, PT Indika Energy Tbk and PT Chandra Asri Petrochemical Center are underway to sell US$250 million and US$350 million of bonds. A state-owned electricity producer PT Perusahaan Listrik Negara is snapping up US$1.25 billion from debt issue.

Frenzy Indo's corporate bonds issuance

Five Indonesia's corporate bonds worth US$2.58 billion (Rp25 trillion) are frenzy to inundate global debts market in the next one-two weeks. They are set to snap up a low cost financing, while rupiah bonds are relatively more expensive.

After delaying for couple weeks, PT Bukit Makmur Mandiri Utama (Buma), coal mining contractor which is underway acquired by PT Delta Dunia Makmur Tbk, is now ready to determine price of its bonds of around US$350 million. Buma is helped by four arrangers, Barcalys Capital, Deutsche Bank, ING, and Macquarie Securities.

Following Buma, PT Chandra Asri Petrochemical Centre, propelled by DBS Bank and Deutsche Bank, is initiating an overases roadshow to sell US$250 of high yield bonds, while PT Indika Energy Tbk today starts to enroll debt market by offering US$230 million of bonds.

A state-owned electricity producer PT Perusahaan Listrik Negara (PLN), arranged by Barclays Capital and UBS, is looking the best moment to grab US$1.25 billion of US dolar bonds, following a previous issuance of US$750 million bonds.

A stellar coal mining in the stock market, PT Bumi Resources Tbk, is seeking US$500 million of debts to underpin its expansion by developing Herald Resources's projects in Sumatra. Bumi has designated two joint arrangers Credit Suisse and Deutsche Bank.

Chandra Asri soon to unveil US dolar bond

PT Chandra Asri Petrochemical Center, a subsidiary of PT Barito Pacific Tbk, is planning to issue US$250 million of high yield bond soon to snap up fresh cash from buoyant global debts market.
Chandra Asri, ethylene and propylene producer, will utilize new debts to refinance its high cost loan and prop up its expansion. The company is helped by two joint lead underwriter DBS Securities and Deutsche Bank.
Barito acquired Chandra Asri worth US$1.05 billion in 2007 by using fresh money from rights issue of Rp9.16 trillion.

PTBA seals approval to roll out railway

State-owned coal miner PT Tambang Batubara Bukit Asam Tbk (PTBA) has a green light from the government to roll out railway with a total investment of US$1.06 billion or Rp10 trillion.
In a press statement this morning, Bukit Asam said 307 km railway will connect coal mining Banko Tengah, Tanjung Enim, South Sumatra to Srengsem, Lampung.
With a support from Thelveton Global Asset, a company curbed by tycoon Prajogo Pangestu, a joint venture firm dubbed PT Transpacific Railway Infrastructure will start to build the railway end of the year.
Both Bukit Asam and China Railway Engineering Corporation own a respective 10% in Transpacific Railway, while the remaining belongs to Transpacific. Thelveton is underway to acquire 80% shares at Transpacific Railway from Coral Moon Resources, PT Handayani Bara Dinamika, and PT Transpacific Investama which is steered by a market player Suganda Setiadi Kurnia.
Of total investment, 70% will be funded by debt and the rest is from equities of three parties. By acquiring 80% of Transpacific Railway, Thelveton must provide equity of US$254.4 million.

Bumi still to pile debts

The biggest coal miner by production volume in Indonesia, PT Bumi Resources Tbk is still hungry for new debts.

After sealing US$1.9 billion of very expensive new loan from China Investment Corporation (CIC), Bumi is underway to issue around US$500 million of high yield bond with a hope can get the same yield as low as dolar bond of its fiercest contender PT Adaro Indonesia.
According to a source familiar to the matter, Bumi has designated Credit Suisse, a darling investment bank, and Deutsche Bank, an instituition which advised CIC providing US$1.9 billion of debt. "Bumi hopes that it can get a yield level as low as Adaro bonds [7.625%]. But, I think it will be tough for Bumi, considering GCG concern," a source said.

Bumi paid US$1.7 billion of a chaper debt using CIC's loan which burdens 12% of annual interest rate and 19% of IRR. Credit Suisse debt fasilities are gone, leaving Rio Tinto's loan in Bumi's book. Rights issue is not a primary option for Bumi. But, still it will be considered," a source said.

In fact, someone who helped Bumi to secure CIC's loan recommends to sell Bumi shares. Did his recommendation sign that Bumi has a big problem to repay its debt?

Adaro secures US$800 million notes

The second bigget coal miner in term of production, PT Adaro Indonesia made a pile on Friday last week.
A subsidiary of holding company PT Adaro Energy Tbk secured US$800 million 10 years senior notes.
In a press release, the notes, which provide an annual interest rate of 7.625%, are guaranteed by Adaro Energy. The rate is lower than Indonesia government US dolar bonds.
Adaro Indonesia is helped by three mandated joint bookrunners, Credit Suisse, DBS Bank Ltd, and UBS AG, to sell the notes. Adaro will utilize the fresh money from the offer to fulfill capex and others general purposes.

Bakrie takes another repos

In line with soaring price of its subsidiaries shares, PT Bakrie & Brothers Tbk is starting to mortgage shares of PT Bumi Resources Tbk, PT Bakrieland Development Tbk, and PT Bakrie Telecom Tbk to seal Rp582 billion cash from creditors.

Bakrie is not skittish company. It regains a confident to take repo (repurchase agreement) from 4 institutions.

Based on Bakrie's first half result, Bakrie family owned company has made repo with Harus Capital, Recapital Securities, Nusa Bintang Lestari, and the most darling local house Danatama Makmur in recent two months.

To draw the cash from repo, Bakrie has pledged 249.6 million of Bumi shares, 96 million of Bakrieland shares, and 391 million of Bakrie Telecom shares. Using those shares underlying, Harus Capital has provided cash of US$46 million to Bakrie, Rp35 billlion from Recapital, Rp55 billion from Nusa Bintang, and Rp55 billion from Danatama.

Coinciding with the repo, Bakrie today announced Bumi shares buyback of 324.21 million from Ancora Group which founded and run by JPMorgan former banker Gita Wirjawan at the level price of Rp1.700.

Ancora offloads BUMI

Ancora Group, in which using a special purpose vehicle dubbed Jupiter Asia No.1 Pte Ltd, yesterday offloaded 4.30% of shares in PT Bumi Resources Tbk to an European-based private equity fund.

Shares crossing, which was tackled by PT CLSA Indonesia, made a price level of Rp1.700 in the negotiation market. It was below the shares level in the regular market at closing of Rp2.725 per share.

"Ancora Grup, founded and run by Chairman Gita Wirjawan, JP Morgan former banker, is behind Jupiter Asia No.1," a source told me yesterday.

Ancora has initially held 4.30% of Bumi shares since acquired US$72 million of PT Bakrie & Brothers Tbk's debts from its creditor JP Morgan on November 27 2008. Under debt agreement, which was signed by Bakrie Investment and Ancora's arm co Blue Resources, Bakrie & Brothers has rights to buyback the shares within one year. It means Bakrie has an chance to regain Bumi shares maximum on November 27 2009, enlarging a portion from merely 16% to 20% at the end of the year.

According to Bumi's public announcement yesterday, China Investment Corporation is in vanguard to invest all Bumi's projects worth above US$75 million.

MSOE to draw more interim dividends

Ministry of State Owned Enterprises (MSOE) is planning to draw 10% of additional interim dividends from four banks, PT Bank Tabungan Negara (BTN), PT Bank Negara Indonesia Tbk (BNI), PT Bank Mandiri Tbk, and PT Bank Rakyat Indonesia Tbk (BRI).

MSOE Secretary M. Said Didu said government still calculates all options regarding the interim dividends additional.

"We are yet to decide dividends value. It depends on banks' financial performance in the third quarter this year," he said.

AAA Sekuritas helps Bank Sulut bond

PT Andalan Artha Advisindo Sekuritas (AAA) has been designated by PT Bank Pembangunan Daerah Sulawesi Utara (Bank Sulut) as a bond underwriter of Rp350 billion.

As reported by Bisnis Indonesia today, AAA is beating two other contenders PT BNI Securities and PT Trimegah Securities Tbk.

"AAA Sekuritas fulfills all requirements, especially the lowest underwriting fee," said Adrie Sorongan, Head of Bond Underwriting Selection. According to a source, AAA Sekuritas is offering the lowest underwriting fee of 0.55%. Bank Sulut sold the last rupiah bond of Rp200 billion in 2005, bearing an annual interest rate of 12.75%. PT Mandiri Sekuritas dan PT Dhanawibawa Arthacemerlang were the bond underwriters.

11 Banks bankroll Adaro

Three biggest coal miner companies in Indonesia are the most frenzy to make a pile in the region.

Following path of PT Bumi Resources Tbk's debt agreement of US$1.9 billion from Chinese fund investment, China Investment Corporation (CIC), PT Adaro Indonesia, a subsidiary of publicly listed PT Adaro Energy Tbk, is in the next queue to hoard banks loan facility of US$500 million.

Adaro Indonesia on October 2 signed loan agreement with 11 different financial institutions. Oversea-Chinese Banking Corporation (OCBC), DBS Bank Ltd, Sumitomo Mitsui Banking Corporation (SMBC), BNP Paribas, The Bank of Tokyo Mitsubishi UFJ Ltd, and UOB are some of institutions which will bankroll Adaro.

The remaining are China Trust Commercial Bank Co Ltd, ANZ Panin Bank, Bank Mandiri, Standard Chartered Bank, and The Hongkong and Shanghai Banking Corporation Ltd.

DBS Bank has become Adaro's loan arranger. Adaro Energy is fully proped-up its subsidiary to secure 60 months matured-loan.

Berau to divest or IPO?

A holding company of coal miner PT Kideco Jaya Agung, PT Indika Energy Tbk, is in vanguard of Berau Coal's bidding price war with the last weapon of banks facility commitment.

Some sources close to the transaction said Rizal Risjad, Berau controlling owned, is willing to enter a final negotiate with Indika due to banks facility commitment, which is ready to make ahead payment of Berau's bonds.

Berau still has US$294 million bonds in its book, which was launched in December 2006. In the event of change of controlling share holder, Berau must make early redeemption.

After ending a due diligence for more than three weeks, Indika Energy, PT Indo Tambangraya Megah Tbk backed up by its parent Banpu Plc Thailand, PT Recapital Advisors, and PT Quattro Inti Investama, submitted a binding price for up to 90% stakes of Berau Coal last month.

"It is true that Recapital has come with the highest price offer of US$1.45 billion. But, it has offered cash and shares swap combination as well. This has made Rizal picks another bidders to negotiate with," sources said.

Quattro, a special purpose company of Surabayan conglomerate Kentjana Widjaja, provided a price offer of US$1.2 billion, a little bit higher than Indika's offer of US$1.15 billion.

As reported by Bisnis Indonesia today, Rosan Perkasa Roeslani, Recapital CEO, said he is awaiting for the following negotiation with Berau.

Quattro's Commissioner Heru Tjahjo Pramono and Indo Tambang's CFO Edward Manurung said the same thing. They said both companies are in a queue to enter next step negotiation with Rizal Risjad.

The sources said it is not easy for Indika if it wins Berau. The first reason is Rizal keens to set up Berau as a publicly listed company, to reduce the tax. If Berau finally enrolls the stock market, it will endanger Indika, especially of chain listing regulations.

"On one hand, Rizal wants to list Berau, while Indika will strive to keep Berau private," the sources said.

When Berau is eventually making itself public, Indika's total revenue will enlarge to nearly US$900 million. Berau will take place more than 80% of Indika's total revenue. So, be careful of chain listing regulation. The other option is Rizal will cancel the divestment and look forward the best option, IPO.

Bakrie to issue Rp1.4 trillion CB

Management of PT Bakrie & Brothers Tbk is weighing to launch Rp1.4 trillion convertible bond (CB) regarding of the next path debt restructuring with Northstar Pacific Partners consortium which is represented by Piper & Price Company Ltd (PPC).

According to a source familiar to the matter said Northstar will absorb and convert the CB, which is scheduled to unveil by end of the year, into around 20%-24% shares of Bakrie & Brothers, an investment holding steered by Bakrie family.

PPC took over Rp6.33 trillion of Bakrie's debt from a previous vague creditors Odickson Finance SA last year. On December 24, Bakrie made Rp2.06 trillion payment to PPC, while the remaining was restructured by issuing two tranches of notes. Tranche A notes worth Rp1.16 trillion and tranche B is Rp3.1 trillion.

PT Bumi Resources Tbk first half financial report, Bakrie's subsidiary, revealed that Bakrie ownes 8.28% stakes at the biggest coal miner in Indonesia.

BUMI repays early debts and acquisitions

After grabbing US$1.9 billion cash by selling debt-like instruments to Chinese wealth fund, China Investment Corporation (CIC), PT Bumi Resources Tbk (BUMI) is intending to repay early all its debts and three acquisitions totally US$1.7 billion.

BUMI President Director Ari Saptari Hudaya, after attending a hearing with Indonesia Stock Exchange yesterday, said the company will make early repayment of acquisition PT Darma Henwa Tbk (DEWA), PT Fajar Bumi Sakti (FBS), and PT Pendopo Energi Batubara worth US$500 million soon after drawdowning the money from CIC.

"Total debts of US$1.7 billion and US$500 million acquisitions will be early repaid, while US$100 million of CIC funds will be used to develop projects of Dairi Prima and Gorontalo Minerals which need a total investment of US$850 million," he said.

BUMI first half financial reported total debt of US$1.2 billion, while requirement of three acquitions repayment should be fulfilled until 2011.

Based on Macquarie Research Equities released on September 30, if BUMI made early repayments, risk of short term financing cost would down. BUMI, the biggest coal minner in Indonesia, must repay debts of US$1.6 billion in the next three years.

Utilization of CIC's loans, bearing interest rate of 12% annually and19% IRR, are actually very expensive. This will skyrocket BUMI financing cost from 500 basist points over Libor to 1,500 bps. Assuming with 4% Libor, new debts refinancing will devastate BUMI net profit by US$150 million in 2010.

ITMG to share interim dividend

PT Indo Tambangraya Megah Tbk will provide an interim dividend of Rp678 per share to its share holders. The dividend equals to 49.78% of company's first half net profit of US$158.7 million.

ITMG shares now is traded at the level of Rp29,300 per share, up from the closing price yesterday of Rp23,800. Banpu Minerals Plc, ITMG's controlling share holder, will secure US$58.24 million dividend from ITMG.

ITMG Corporate Secretary Roslini Onwardi said the dividend distribution won't devastate company financial performance.

Japfa injects capital Rp116 billion

Capital injection of Rp116.46 billion will be placed along with a merge between PT Japfa Comfeed Indonesia Tbk and PT Multi Agro Persada Tbk.

Japfa Finance Director Yulius Putut Djagiri said the company will issue 582.32 million of B seri shares which is hoped to jack up total capital to Rp1.6 trillion.

Bakrie loses more BUMI

A holding investment company controlled by Bakrie family, PT Bakrie & Brothers Tbk, has less controll over the biggest coal miner in Indonesia, PT Bumi Resources Tbk.

Bumi's first quarter this year reveals that Bakrie controlled 16.87% stakes in Bumi, while the stakes decreased 5.39% to remaining 8.28% at the end of June. In comparison, Bakrie steered 15.78% stakes in Bumi at the end of June last year. Where did those stakes outflow? Did Bakrie just mortgage or lose the stakes?

A source familiar to the matter said a fading stakes was related to Bakrie's complicated debt restructuring with Piper & Price Company Ltd (PPC) signed on April 17 2009. PPC, is representative company of a creditors consorsium led by Northstar Pacific Partners, took over Rp6.33 trillion from Odickson Finance SA.

Of the total debt, Bakrie paid Rp2.06 trillion, while the rest was restructured by issuing 2 tranches of notes. One of them required shares pledge. Bakrie mortgaged 2.91 billion of Bumi shares to PPC.

Regarding to the issue, Senior Vice President Investor Relations of Bumi Dileep Srivastava said Bakrie still controlls 17% stakes in Bumi. The position remains intact. "Let's wait for the first half report of Bakrie. Don't just look at Bumi's report," he said.

Public's ownerships in Bumi have enlarged from 75.93% to nearly 80%. Jupiter Asia No.1 Pte Ltd, representing Ancora Capital which bailed out Bakrie's debt from JPMorgan last year, holds 4.30% stakes. Bakrie keens to buyback the stakes which is now owned by Jupiter Asia by the end of this year.

BUMI flares, ENRG is the worst

If you compare the first half result of four subsidiaries of PT Bakrie & Brothers Tbk, a holding firm majority steered by Bakrie family, PT Bumi Resources Tbk is the most sparkling, while PT Energi Mega Persada is the worst.

In term of revenue, Bumi remains intact. The biggest coal miner in Indonesia posted a slight growing of 2%, while the three remaining, PT Darma Henwa Tbk, PT Bakrie Sumatera Plantations Tbk, and Energi Mega, were engulfed by steep drop.

According to their financial results submitted to Indonesia Stock Exchange yesterday, Bumi was beset 16.53% drop in net profit, while Darma Henwa suffered from 93.59% tumble and Bakrie Plantations' bottom line dipped by 58.58%.
Energi Mega made the worst bottom line by posting net lost of Rp244.69 billion from a year earlier of Rp77.02 billion in net profit.
Darma Henwa's net profit in the first half 2009 was US$0.22 million from US$3.45 million in the first six months last year. Bakrie Plantations booked Rp135.19 billion net profit, down from a year earlier of Rp326.44 billion. The biggest contributors for the tumble are low commodities price such as CPO and oil along with sliding forex gain.