Bumi Resource seeks funds to acquire KPC shares

Natural resources-based company Bumi Resource will seek third party?s funds either in the form of bonds or bank loans to acquire the 51 percent stake of major coal producer Kaltim Prima Coal (KPC), Bisnis Indonesia reported on Saturday.

The company?s director and chief financial advisor Eddie J. Soebari said in Jakarta over the weekend that Bumi Resource had formally submitted its proposal to acquire KPC?s 51 percent stake worth about US$420 million.

?To finance the acquisition, we will use bank loans or bonds,? he was quoted as saying.

Bumi Resource, an affiliate of Bakrie and Brothers business group, is one of five bidders of KPC?s 51 percent share. Other four bidders are PT Nusantara Energy (owned by former chief of the military strategic command Kostrad Prabowo Subianto), East Kalimantan-based companies PT Perusda Melati Bhakti Satya, PT Batubara Borneo Batuah and the forum for monitoring of East Kutai development.

However, securities analyst doubted the capability of the publicly listed Bumi Resource to raise bank loans or issue bonds to finance the acquisition. ?With the company?s current financial condition, it would be difficult for Bumi Resouce to raise bank loans or to issue bonds to finance the acquisition, said an analyst of BNI Securities Norico Gaman.

According to its contracts of works, KPC is required to divest 51 percent of its shares to local investors. (*)