Moody's: Bumi misses interest payment on its senior secured notes

(Singapore, November 07, 2014)--Bumi Resources Tbk.'s (P.T.) (Bumi, Ca stable) missed the interest payment on its $700 million 10.75% senior secured notes due 2017, at the end of its grace period on 6 November 2014, which constitutes an event of default under its bond indenture. The company plans to make the payment of interest by 28 November 2014. We are not aware of Bumi being presented with a notice of default by bondholders or any other lenders at this time.

"Bumi's failure to make the interest payment on its 2017 notes is yet another event of default which highlights Bumi's financial stress and the complexity of its ongoing balance sheet restructuring" says Brian Grieser, a Moody's Vice President and Senior Analyst.

"This comes on the heels of the company's missed principal payment and subsequent restructuring of its convertible bonds in August and the distressed exchange with China Investment Corporation in July", Grieser adds. Bumi's debt for equity exchange with China Investment Corporation was the first default in Bumi's ongoing restructuring efforts under Moody's definition of default.

As part of its efforts to restructure its balance sheet, Bumi has been involved in negotiations with banks in an effort to extend its maturity or restructure its terms. The company also launched a consent solicitation to its convertible bondholders in August to amend the indenture terms after failing to make the principal repayment.

"We expect Bumi's efforts to restructure its debts, ease liquidity pressures and improve leverage to extend into 2015 and potentially 2016. In the near term, the company needs to address upcoming interest and maturities as well as other payments that are currently in arrears on its bank loans," adds Grieser, who is also the lead analyst for Bumi.

Ratings are unlikely to be upgraded prior to the successful completion of Bumi's restructuring efforts.

Bumi is Indonesia's largest thermal coal producer and one of the top three largest thermal coal exporters by tonnage globally. Through its principal assets -- PT Kaltim Prima Coal (KPC) and PT Arutmin -- Bumi produced 82 million tons (mt) of coal in 2013. (ends)