Trading in Bumi shares continue: Bapepam

The Capital Market and Financial Institutions Supervisory Agency (Bapepam-LK) pledged Monday to continue trading in shares of a coal company owned by the influential Bakrie family, following intense pressure to suspend the trading, The Jakarta Post reported.

Bapepam-LK chairman Fuad Rahmany met with top officials from the Bakrie Group of companies, including the family?s lieutenant Ari S. Hudaya, over a demand to halt trading in shares of PT Bumi Resources to help keep preserve the Bakries? interests.

?We are not going to suspend the share trading because we need to protect the interest of the public in general ? I mean the protection of our mutual fund industry and retail investors,? Fuad said.

PT Bakrie & Brothers, the flagship of the Bakrie family, has demanded a trading suspension in the shares over fears the slump may compromise its deal with Northstar Pacific, which agreed on Nov. 1 to purchase Bakrie?s 35 percent stake in Bumi for US$1.3 billion.

Northstar, teaming up with state mining firms, will need 28 days to verify necessary documents before wrapping up the deal, including issues related to part of the 35 percent stake that were put up as collateral by Bakrie for loans.

Bakrie needs to sell its assets to expedite debt payments after shares of Bumi and other Bakrie firms, pledged as collateral for $1.43 billion in loans, plummeted during the stock market havoc last month.

The suspension in Bumi is also needed to help the Bakries, headed by Coordinating Minister for the People?s Welfare Aburizal Bakrie, settle debts incurred through a repurchasing agreement, or a repo.

This has been blamed for putting the Bakrie Group of companies and some securities houses in trouble. A repo is similar to a secured loan where creditors receive securities as collateral to protect against default. Companies often sell stakes for cash to a creditor and agree to repurchase those stakes at a later date. (*)