BUMI sells asset to repay debt

By Romel S. Gurky

IDX-listed coal mining giant PT Bumi Resources Tbk announced on Friday that it has executed a Conditional Sale and Purchase Agreement with Jainson Holding Hong Kong Limited for 50 percent of shares in its thermal coal asset Fajar Bumi Sakti (FBS), through its SPV's Bumi Resources Investment and Leap Forward Resources Limited.

The conditional agreement has a long stop date of six months to conclude the transaction, involving final due diligence and applicable statutory approvals.

The proceeds from this share sale when concluded is expected to further reduce the company?s debt by $130 million to the respective secured lender.

This follows the company?s previous debt restructurings and the recently concluded rights issue

This action aims to strengthen the firm?s financials by bringing debt down and interest costs back to sustainable levels in today's weak sector sentiment and falling coal prices, the firm said.

According to the firm?s website, the FBS mining concession is located in Load Ulung, Tenggarong, East Kalimantan with concession area covering 988 hectares. The proven reserved in Loa Ulung about 14 millions tons.

In 2006 FBS acquired a new concession covering 4.008 hectares in Desa Gunung Sari, Tabang East Kalimantan. In 2007, FBS acquired another concession area covering 4.995 hectares in Desa Buluk Seng, Tabang, East Kalimantan. The estimated reserved from Tabang area is approximately 100 millions tons.

FBS operates two kinds of mining techniques, the underground and open pit techniques. Both techniques are implemented in Loa Ulung, Tenggarong. While in Tabang area, FBS will only apply the open pit mining technique.

Editing by Johannes Simbolon