Nov 18, 2010

The higher BUMI, the richer Bakrie

Parent company of Bakrie Group, PT Bakrie & Brothers Tbk (BNBR), is a precisely beneficiary from a combination of US$3 billion cash and shares swap deal between Vallar Plc, PT Bumi Resources Tbk (BUMI), and PT Berau Coal Energy Tbk (BRAU).
Look at BNBR stocks today. BNBR skyrocketed 26.67% to Rp76 per share, while its subsidiary, Bumi, Indonesia's largest thermal coal exporter, surged 7.69% to Rp2,800 per share.  
Besides BNBR surge, don't forget, Bakrie still has option to exercise buyback rights of Bumi stocks from Glencore International AG.Bakrie & Brothers has managed a shares swap transaction agreement worth US$200 million with one of the global largest commodities player Glencore International AG.
The agreement, signed on June 26 2010, has made Glencore to be one of shareholders at Indonesia's largest thermal coal exporter Bumi.
Based on Bakrie & Brothers's June financial report, under the swap agreement, Bakrie has rights to buyback Bumi shares from Glencore within 2 years.
The latest data shows that Glencore holds 4.98% stake or 968 million shares in Bumi Resources (before non-preemptive rights).
Glencore had made a purchase of Bumi stocks at Rp1,840 per share via local brokerage Sinarmas Sekuritas.
If Bakrie would exercise the rights at Rp1,840 and sell Bumi at the current market price, it could seize Rp929.28 billion cash or 52.17% potential gain.
A source said Bakrie will exercise the rights as Bumi stocks surge. "With Bumi bounces back, it is easier for Bakrie to obtain financing to buyback Bumi stocks from Glencore," the source. So, the higher Bumi stocks is the better for Bakrie.

Disclosure: No position at the stock mentioned above.  

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