Northstar may buy less Bumi shares

Northstar Pacific Partners Ltd may only buy between 10 percent and 20 percent shares in Indonesia?s largest coal miner PT Bumi Resources, much less than the initial target of 35 percent, Bisnis Indonesia reported on Thursday.

?Due diligence (on Bumi Resources) is soon to be completed. Now, we are talking about payment mechanism and price,? Northstar?s founder Patrick Waluyo told the newspaper on Wednesday.

Northstar reached agreement on Oct. 31, 2008 with PT Bakrie and Brothers to buy the latter?s 35 percent stake in Bumi Resources. Under the agreement, Northstar is allowed to carry out due diligence on Bumi and is given until Nov. 28 to close the transaction. Bakrie is controlled by the Bakrie family, a politically-connected conglomerate of Indonesia.

Patrick said that of the 35 percent stake owned by Bakrie and Brothers, only 10 percent and 20 percent was considered ?secure?. The remainder has been placed as collateral for loans received from creditors. That?s the reason that Northstar decided to buy only between 10 percent and 20 percent stake.

Bisnis however quoted a source as saying another reason that Northstar cut the portion of stake it would buy is that it has not been able to raise enough funds to buy the 35 percent stake. Thus far, the firm has been able to get loan commitment amounting to $300 million, including $200 million from Texas Pacific Group and $100 million from Farallon Capital Management.

According to the source, Northstar was also seeking to renegotiate the purchasing price for the shares, offering to buy at Rp 1,200 a share, as against Rp 2,100 agreed under the October agreement.

"For Bakrie, that amounts to no deal," the source said. (*)