Berau continues to review debt restructuring options

IDX-listed coal mining company PT Berau Coal Energy Tbk is still reviewing other options to restructure its debts, despite earlier proposal to issue new bonds, amid changing global coal market condition and lawsuit from one of its creditors, reports said on Thursday.

Berau Coal Independent Director Arief Wiedhartono was quoted by Bisnis Indonesia as saying that the review to determine the debt restructuring mechanism which hopefully can be completed by year end. ?It seems that (coal) market condition can still change until the end of the year, so we have to make a further review,? he said.

The well-diversified Sinar Mas Group through Asia Coal Energy Ventures (ACE) acquired more than 73 percent stake in LSE-listed Asia Resource Minerals plc (ARMS), which owns nearly 85 percent stake in Berau, in the middle of this year. Berau initially planned to restructure its US$950 million debts by issuing new bonds and capital injection from Sinar Mas. Under the initial plan, Berau will issue new bonds worth $387.53 million maturing 2019 to replace $450 million bonds which matured in July of this year. The company will issue another $443.75 million bonds maturing 2020 to replace $500 million bonds maturing 2017.

Berau is also facing liquidation threat from one of its creditors after the company failed to repay debt. Raiffeisen Bank began court proceedings at a British Virgin Is-lands court in September, in a bid to liquidate ACE, arguing that the investment vehicle reneged on a $120 million loan-purchase signed in May.

A Singapore court had imposed a moratorium on debt issued by a unit of Berau, giving it until January 4 to negotiate with bondholders.

Elsewhere, Arief said that considering the lingering downturn in the coal market, Berau has decided to revise capital expenditure plan particularly with regards to the use of remaining initial public offering proceeds worth Rp 346 billion. Instead of using the funds for growth strategy, the company will focus on efficiency measures. ?The coal price is expected to remain under pressure over the next two to three years. So we will focus on efficiency,? he was quoted by Kontan as saying.

He said that Berau will use the remaining IPO proceeds to increase the capacity of its coal processing facility, loading conveyor, and hauling road at Lati, Binungan and Sambarata mines. The company will also add two tug boats and barges. (*)