Bumi Resources said on Friday it aims to raise 3.24 trillion rupiah ($362 million) in a share placement in September (see the full news below).
Comment from our mining analyst Rania.
This is lower than the originally planned $492m. Not too surprising, in our view. The share issue price is at premium to current price, add this to the lingering concerns of the Bakrie group.
Will it be enough to cover ST debt? There has been talk recently that it is also refinancing its $300m debt (ie about half of its ST debt) from JP. And they are supposed to get $250m proceeds from its assets sale in 1h10. If all materialized, will be sufficient to cover ST debt. But, gearing reduction would not be as much as previously expected.
Less dilution vs. less gearing reduction. There'd be 7.5pct eps dilution from previously 10pct eps dilution. But gearing reduction would also likely be less. Since its debt is mostly high-cost debt (above 12pct), less gearing reduction won't be positive for earnings.
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