Bumi may seek new buyer for coal miners: Sources

An Indonesian bank is getting cold feet about its planned $3.2 billion acquisition of PT Bumi Resources' coal mines, prompting Bumi to cast around for another buyer, the Reuters reported from Singapore on Monday.

People close to the situation said Renaissance Capital, a little-known investment bank, was running the slide-rule over the mines' financials again after discovering they have been performing below expectations.

Bumi, Indonesia's largest listed mining group, said in March it agreed to sell PT Arutmin Indonesia and PT Kaltim Prima Coal, among the country's biggest coal exporters, to PT Borneo Lumbung Energi, a Renaissance affiliate, in what would be Indonesia's second-biggest acquisition.

"It's getting murky," said one source, asking not to be identified, adding that the two mines were performing below expectations though they remain "fundamentally good operations".

The source said the mines had been hit by heavy rains in the first half of the year. Bumi's corporate secretary Geroad Jusuf said the deal had not been cancelled. Renaissance was not available for comment.

Renaissance's efforts to borrow $2.8 billion -- $2.1 billion in senior and junior debt and $700 million in exchangeable bonds -- to help finance the purchase is a month behind schedule. No official reason has been given for the delay.

Bumi is already looking around for another buyer. "Bumi is looking at the potential of repackaging it to other parties," the source familiar with the matter said.

Spokespeople at Credit Suisse, which is arranging the Renaissance fund-raising and advised the bank on the acquisition, and JP Morgan, which advised Bumi on the coal mine sale, declined to comment.

Bumi needs the proceeds from the mine sale to bankroll the mostly undeveloped oil and gas blocks of sister company PT Energi Mega Persada Tbk (EMP). Bumi plans to take over the oil explorer in an all-stock bid worth around $1.2 billion.

Bumi has delayed its shareholders' meeting to vote on the takeover by three weeks to September 19 due to the mine sale delay.

EMP recently suffered a major drilling accident at one of its wells in Java, and the authorities have struggled to plug a noxious mud flow that has displaced thousands to the south of Indonesia's second city, Surabaya.

Merrill Lynch has placed its EMP investment rating under review given the potential environmental liabilities from the drilling accident and uncertainty about its merger with Bumi. (*)