PT Bumi Resources, Asia’s most-indebted coal miner, averted a default yesterday in a show of confidence in the region’s distressed bonds.
The company won support from creditors at a midday meeting in Singapore to restructure US$375 million (RM1.19 billion) convertible bonds, said Bert Grisel of Moelis & Co, a representative of bondholders, in an interview following the vote.
The reprieve may boost confidence among holders of US$4.2 billion of debt owed within 12 months by the company that was previously part of a failed venture between Indonesia’s Bakrie family and United Kingdom financier Nathaniel Rothschild.
Bumi pursued its second restructuring of debt in as many months after Indonesia’s economic growth slowed to the weakest pace in more than four years and coal prices sank to the lowest since 2009. Dollar-denominated notes issued by Bumi dragged Indonesia to the second-poorest performance behind South Africa this year in a Bank of America Merrill Lynch index of distressed borrowers in global emerging markets.
“They need to get this one done,” said Brian Grieser, a Singapore-based analyst at Moody’s Investors Service. “They will need to do some restructurings on their debt and sell some assets. That could potentially lead to some haircuts for creditors.”
The embattled miner was seeking approval to issue six per cent convertible notes maturing in April 2018 to replace the 9.25 per cent bonds that were due August 5, according to the consent solicitation document. It also wanted to slash the conversion price to 250 rupiah (six sen) from an original 3,366.9 rupiah.
With yesterday’s approval, Bumi can effect the changes from Monday, according to the consent document.
Bumi wasn’t able to “formally” confirm the vote’s result, director Dileep Srivastava said in an emailed response.
“We are confident of the outcome.”
A committee representing at least 30 per cent of the holders had already agreed to back the plan, Bumi said in an August 13 stock exchange filing. It required more than 75 per cent of votes cast to succeed. Bloomberg