Aug 26, 2010

BUMI plans to raise up to US$300 mio

Indonesia's biggest thermal coal exporter PT Bumi Resources Tbk (BUMI) has launched a three-year private deal. The three-year loan will carry an interest rate at one-month Libor plus 11% payable on a monthly basis. The loan will share the same security and cash waterfall mechanism as that covering the US dollar bonds and its other existing loans. 
The deal is sweetened with some upfront fees and a make-whole provision if the loan is prepaid before maturity. 
After factoring in the upfront fee and upward sloping swap curve, the proposed private loan is expected to generate an IRR of around 12% (factoring in some liquidity premium for the private loan), which is higher than the 10.7%ytw for Bumi ‘16s for three years shorter maturity. 
Bumi plans to raise up to US$300 million to repay its two convertible bonds that are puttable for a total of around USD430 million before the year end.
"We believe that this should be credit positive for Bumi. If the company is successful in raising the full US$300 million, it would go a long way to address Bumi’s refinancing risk," said Asia Credit Roundup report published by J.P.Morgan yesterday.
On the news, Bumi '16s has gained around one point. J.P.Morgan maintains neutral recommendation on Bumi ‘16s (105.125offer, 10.68%ytw).

Disclosure: No position at the stock mentioned above.

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