Jun 10, 2011

Vallar to buy 75% stake in Bumi Minerals

London-listed company Vallar Plc announces a 75% stake acquisition of non-coal company PT PT Bumi Resources Minerals Tbk (BRMS) from PT Bumi Resources Tbk. Vallar also annouced the increase of its ownership in Bumi Resources (step-up transaction).
In return, Vallar will issue US$2.07 billion convertible bonds with a 2% coupon and a £15.88 initial conversion price to Bumi Resources. The bonds are convertible into new Vallar voting ordinary shares.
The acquisition price of Rp850 per share represents a 21.9% premium to Bumi Minerals's 30 day average closing price of Rp697 per share to 27 May 2011.

The key terms of the convertible bonds will be as follows:
Issuer: a wholly-owned subsidiary of Bumi Plc (previously Vallar Plc)
Guarantor: Bumi Plc
Currency: US$
Underlying shares: Bumi voting ordinary shares
Listing: Official List of the FSA and trading on the Professional Securities Market of the London Stock Exchange
Maturity: 5 years and 6 months from the issue date (the maturity date)
Cash coupon: 2.0% per annum, payable semi-annually in arrear commencing on the date that is six months after the Issue Date
Conversion price: £15.88, representing a 21.9%, premium to the thirty day average Vallar Voting Ordinary Share closing price of £13.03 per share to 27 May 2011
Conversion period: from 40 days following the issue date until the fourteenth calendar day prior to the maturity Date. 
No Convertible Bond is convertible when held by or on behalf of Bumi Resources
Issuer call: non-callable for three years following the Issue Date. Thereafter callable at par plus accrued interest provided that the Bumi Shares are trading at 130% of the conversion price for a period of 20 out of 30 trading days.

The convertible bonds will be convertible into a maximum of approximately 79 million new Bumi voting ordinary shares at the initial conversion price. The BRMS proposal is expected to complete in the third quarter of 2011 and will require approval of Bumi voting ordinary shareholders. 
Bumi proposes to engage with the Indonesian regulator to review whether a mandatory tender offer for the remaining shares in BRM would be required as a result of the reorganisation.

Disclosure: No position at the stock mentioned above.

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