Takeaways from Jakarta — Bumi Resources presented at Citi's Indonesia Investor Conference on Aug.4-5.Below are key takeaways.
Management hopeful of its deleveraging efforts — Management ’s plan to reduce its current huge debts of US$3.7b by US$700m this year appears to be progressing well.The company expects its non pre-emptive share issuance to be completed by the end of August,potentially raising up to US$495m.However,the company intimated that CIC is unlikely to participate in the new share issuance.
Planned listing of Bumi Resources Mineral (BRM)— The planned listing of Bumi Resources'non-coal unit,Bumi Resources Mineral (BRM),is expected to be realised before October.CIC might be interested in taking a significant stake in BRM pre-IPO.Internally,the company values BRM's 25%stake to be listed at c.US$600m.
Fajar Bumi Sakti (FBS)— The company is ramping up its heavy equipment purchases to boost production to 4m tons annually.FBS has decided to switch to open pit technique from underground mining given the latter's complexity.
Production target deferred — It appears that Bumi Resources has deferred the target of reaching 112m tons production to 2013 from 2012 previously. Our channel checks with coal mining contractors and heavy equipment distributors seem to reaffirm our view that the key coal producers' production targets in the next few years are too aggressive.
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