Bumi Minerals successfully de-leverages balance sheet

PT Bumi Resources Minerals Tbk (BRMS) reported on Wednesday that its parent company, PT Bumi Resources Tbk (BUMI) is converting its Rp 4.95 trillion (approximately US$ 546 million) mandatory convertible note (MCN) into equity ownership in BRMS at the conversion price of Rp 670 / share.

Consequently, BRMS issues 7.4 billion new shares in the name of BUMI for the MCN settlement.

Kenneth Farrell (CEO of BRMS) said,? In December 2010, we used part of the initial public offerings proceed to repay the $ 148 million loan facility from the Bright Ventures Pte Ltd. Therefore, the $ 546 million MCN settlement will further improve BRMS? debt to equity ratio to 0.1x. We are practically running the Company at zero debt level.?

Yuanita Rohali (CFO of BRMS) added, ?Our Company?s balance sheet has been deleveraged significantly. This leads to reduced interest expenses, which means we have more free cash flows to be allocated for operations. We hope to monetize our assets within the expected time frame.?

The MCN conversion will increase BUMI?s stake in BRMS from approximately 82% to roughly 87%. Consequently, diluting the market free float from 18% to 13%. However, assuming the warrants are fully exercised at Rp 700 / share in the next 24 months, the market?s free float will increase to approximately 20%; therefore, diluting BUMI?s stake in BRMS to 80%. BRMS is expected to receive incoming fund of $ 171 million from the fully exercised warrants (at strike price of Rp700/share) between June 2011 and December 2012. (godang)