Mar 28, 2011

Wow..BUMA to write-off Rp186.67 bio

Indonesia's second largest coal mining contractor PT Bukit Makmur Mandiri Utama (BUMA) will write-off Rp186.67 billion of fuel receivable which shall be obtained from its major client coal miner PT Berau Coal.
In an official statement signed by Director Thomas K. Husted at PT Delta Dunia Makmir Tbk (DOID) and sent to Indonesia Stock Exchange late today, BUMA and its client coal miner PT Berau Coal, a wholly owned subsidiary of PT Berau Coal Energy Tbk (BRAU), BUMA and Berau Coal has agreed to settle a different view on fuel cost occured in 2009.
In total, BUMA recorded a fuel receivable of US$24.36 million and Rp161.46 billion from Berau Coal.
However, referring to the agreement, Berau will pay 50% of each fuel cost. It means Berau will pay US$12.18 million and Rp80.68 billion or a total of Rp186.67 billion to BUMA.
BUMA, a wholly owned subsidiary of Delta Dunia, will write-off the remaining after it complies the transaction with Bapepam-LK regulations No.IX.E.2. about Materal Transaction and Change on Main Business.         
The impact
As of September 2010, Delta Dunia posted Rp361.93 billion net income or an annualized net income of Rp469.24 billion in 2010. By writing-off Rp186.67 billion, such transaction may sharply drag down Delta Dunia's bottom line to approximately of Rp282.57 billion.
A source said with financial charges of just secured of syndicated loans shall be burdened, Delta Dunia's net income might lower. "Financial charges occurred during the bonds buyback was not cheap," the source said.  
Major client
For BUMA, Berau Coal is major client. Based on a presentation of Delta Dunia's management in November last year, BUMA has three long term contracts with Berau Coal at three different coal mine sites. At Lati coal mine, BUMA secures contract with period of 1998-2018. At Binungan coal mine and Suaran Port, BUMA secures two contracts with period of 2003-2018 respectively.
But, In December, BUMA was awarded by Berau Coal of 5-year contract at Pit East 2 of Berau's Lati mine site with a total production target of 226.8 million bcm and 20,7 million tons with projected value of US$400 million-US$500 million.
The potential write-off may drag down Delta Dunia's stock price. It inched up 1.75% to Rp1,160 per share today.

Disclosure: No position at the stock mentioned above.

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