Bumi Resources plan merger with Arutmin

Publicly-listed mining company PT Bumi Resources Tbk plans to merge with PT Arutmin Indonesia after the former sealed a deal with Arutmin's shareholders to buy Arutmin, a coal mining company with operations in South Kalimantan.

Bumi chief financial officer Eddie J. Sobari said that his company had agreed to buy 80 percent stake at Arutmin from BHP Mineral Exploration Inc. for US$148.5 million, and is now negotiating with PT Bakrie & Brothers to buy the remaining 20 percent stake, at a price range of $35-$37 million.

Funding for the acquisition would come from equity and loans, with equity accounting for 30 percent of the total fund, while the remaining 70 percent to be financed with loans.

For that purpose, Bumi Resources has filed a letter to the Capital Markets Supervisory Agency (Bapepam) to call an extraordinary shareholders meeting, slated to be held on Nov. 29, with the main agenda of asking the shareholders' approval to acquire Arutmin from BHP and Bakrie.

After that, Bumi would merge with Arutmin, and the merger process itself would be completed in April, next year, Eddie said.

Eddie, however, said that it was not decided yet, what the name of the company after merger. He hinted that the new name would likely be a combination of the two, as Bumi Resources is a listed company and Arutmin has a good name.

"So, maybe, the name will be Bumi Arutmin Indonesia," he said.

After merger, Eddie said Bumi would have better financial standing. Total assets would be boosted from Rp 503.8 billion to Rp 3.6 trillion, profits are expected to increase from negative Rp 9.62 billion as of March, 2001 to positive Rp 320.84 billion.

Book value per share would also increase from Rp 22 per share to Rp 66 per share, with current ratio to increase from 38 percent to 104 percent.

Nevertheless, Bumi debt would increase from Rp 831 billion now to Rp 831 billion plus $128.8 billion. (*)