Renaissance to borrow $2.1 billion to buy Bumi coal mines

An investor group led by Indonesian investment house Renaissance Capital plans to borrow $2.1 billion to fund a $3 billion acquisition of two coal mines from Bumi Resources, Reuters reported on Monday from Singapore.

Bumi, Indonesia's largest listed mining group, said last month it would sell the coal mines to an international investor group in a deal worth $3.2 billion. But it gave no details on the structure of the deal.

The purchase price would come down to $3 billion following "a working capital adjustment", said a source close to the deal.

The $2.1 billion would be borrowed in three tranches, comprised of senior, mezzanine and junior pieces in the form of loans and bonds, said the source, who does not represent either the buyer or seller in what would be Indonesia's second-largest acquisition.

The remaining $900 million would be financed by equity, 51 percent of which, or $459 million, would come from Renaissance Capital, the source, who requested anonymity, told Reuters.

The other 49 percent of the equity would be about evenly split between other members of the consortium, including Japanese trading house Marubeni Corp. and top Australian engineering contractor Leighton Holdings Ltd., the source said.

To help finance its equity portion of the acquisition, Renaissance Capital would borrow $450 million from Marubeni, Leighton and an unidentified Indonesian company, the source said.

"Basically, Renaissance is getting a little bit of a free ride," the source said, adding that Marubeni, Leighton and the Indonesian party would each lend $150 million to Renaissance.(*)