By Alex MacDonald
LONDON--The proposed separation of U.K-listed coal miner Bumi
PLC (BUMI.LN) from the Bakrie group through a series of
transactions is credit negative for PT Berau Coal Energy TBk
(BRAU.JK) and to a lesser extent for PT Bumi Resources TBk
(BUMI.JK), Moody's Investor Service said in a report Thursday.
Bumi's board of directors received last week an offer from the
powerful Indonesian Bakrie family to sever ties with the company by
buying out Bumi's Indonesian assets for $1.2 billion and cancelling
the family's stake in the London-listed company. The deal would end
a tumultuous period in which Bumi's board members have pitted
themselves against each other over corporate governance rows that
caused the company's shares to plunge.
The proposal involves three deals. The first two are focused on
buying out Bumi's 29% stake in Indonesia's largest coal miner PT
Bumi Resources TBk (BUMI.JK) in which the Bakrie family has a
significant interest. The third deal is focused on acquiring Bumi's
majority stake in Indonesia's fifth largest coal miner PT Berau
Coal Energy TBk (BRAU.JK).
Moody's said that the Bakrie Group's purchase of Berau Coal
Energy, which has a B1 credit rating and stable credit outlook,
would likely trigger a change of control clause in Berau Coal
Energy's bonds, which would adversely affect the company's
liquidity and refinancing risk.
Berau Coal Energy would likely have to repay $505 million when
the bonds are can be redeemed upon change of control. Considering
Berau Coal Energy's cash on hand of $522 million at the end of June
and ongoing capital expenditure, it may not have enough cash to
cover such a bond repayment, the credit rating company said.
"Berau Coal Energy's current rating considers its large cash
holding, which allows it to tide through the weakened operating
environment. A significant decline in cash on hand would result in
negative credit and rating pressure," Moody's said.
Bumi Resources, which has a B1 credit rating with a negative
outlook, could also be negatively affected by the ongoing
independent investigation and uncertainty arising from the
potential change of shareholders, it added.
Moody's said it downgraded Bumi Resources' outlook to negative
last month to reflect the fact that its lingering corporate
governance issues would affect its ability to refinance over $300
million in loans due in 2013. Bumi Resources is likely to become
less transparent if London-listed Bumi sells its stake, Moody's
added.
Write to Alex MacDonald at alex.macdonald@dowjones.com