Bakrie, Berau, Bumi..Follow the money?


Bumi, Berau Coal and Aburizal Bakrie are in the news again and not in a good way. Berau is 84.7 percent owned by London-listed Bumi plc, which is currently 23.8 percent indirectly owned by Bakrie Group. The Bakrie Group is controlled by members of the Bakrie family. 

English: Aburizal Bakrie, Indonesia's Coordina...

Aburizal Bakrie, 

As is all so common with Indonesia news reports the article is far more interesting for what it does not say than for what it does.  An extract from the article.

Bumi plc announced last week that it had signed an agreement with Berau’s former president director Rosan Roeslani, who agreed to transfer assets and cash amounting to$173 million in an attempt to partly recover the missing funds.

There will remain, however, a shortfall of $28 million in the recovery of the missing funds. Eko said the discrepancy was due to “the reclassification of investment booked in 2010

One can only speculate on what bizarre sequence of events and corporate governance lead to a President Director agreeing to “transfer” $173 million dollars as described above.  The article certainly provides little light on the shenanigans here.  For a publicly listed company the government regulator remains strangely (but for Indonesia not surprisingly silent).

Of most concern is Aburizal is a potential presidential candidate for Indonesia and the failure of the media to dig deeper and bring these issues to the light of day is one reason why indonesia so richly deserves the reputation as a commercial basket case and a zombie democracy.

For your reading pleasure and amazement include the article from the Jakarta Post in full below:

Troubled coal mining company PT Berau Coal Energy is planning to improve its finances, following a dire situation involving a dispute with its shareholders.

“We have seen the worst episode in terms of financial affairs,” president director Eko Santoso Budianto said after the company’s meeting of shareholders on the weekend.

“Our efforts to improve the situation include changes and more roles for commissioners so that we won’t see a repeat of what happened.”

Berau is 84.7 percent owned by London-listed Bumi plc, which is currently 23.8 percent indirectly owned by Bakrie Group. The politically wired Bakrie Group is controlled by members of the Bakrie family, among whom is Aburizal Bakrie, who is running for the 2014 presidential election. 

Bumi plc has been under media spotlight following disputes between its shareholders, particularly the Bakrie Group and cofounder British financier Nathaniel Rothschild, over good corporate governance issues, which then led to the resignation of a number of the London-based firm’s directors, for email hacking and alleged financial irregularities. Bumi plc recently conducted an internal audit for its finances and found missing funds of a total of US$201 million in 2011 and 2012. The funds are related to Berau’s unclear spending, such as land payments.

Bumi plc announced last week that it had signed an agreement with Berau’s former president director Rosan Roeslani, who agreed to transfer assets and cash amounting to$173 million in an attempt to partly recover the missing funds.

There will remain, however, a shortfall of $28 million in the recovery of the missing funds. Eko said the discrepancy was due to “the reclassification of investment booked in 2010”.

Eko said the agreement between Bumi plc and Rosan would involve a transfer of his entire 49-percent stake in PT Asian Bulk Logistics and 600 hectares of land owned by PT Borneo Prapatan Lestari to Berau. Rosan, according to Eko, was the majority shareholder of Borneo Prapatan Lestari.”

“Asian Bulk Logistics has a bulk [floating crane], which we have leased for 10 years. Borneo Prapatan Lestari’s land is also important because we have been renting the land for mining activities. All are in valuations,” Eko said.

“Whatever the form [of the assets to be transferred], I think the most important thing is that they are recovered,” Eko said, commenting on why the recovery involved payments made in transfer of assets rather than the interested party’s initial concerns, including the land payment itself.

Berau is targeting to produce up to 23 million tons of coal by year’s end, a 9 percent increase from 21 million tons in 2012. The company already produced 9.4 million tons in the first five months of the year, up by 5.6 percent from 8.9 million tons in the same period last year.

“All indications show realistic recovery. Our sales are higher than expected, our cost of production is lower than our expectation,” Eko said.

Finance director Scott Merrillees said the company aimed to lower its production cost to up to $42 per ton compared to its initial target of $45 per ton this year. He also said Berau would likely exercise an option to redeem its debt papers.

“We hope to refinance our bonds issued in 2010 with lower interest rates to relieve us. But we’ll need to see the market condition,” he said, adding shareholders had granted their approval for the debt paper refinancing.

Berau, through its completely owned subsidiary Berau Capital Resources Pte. Ltd., issued $450 million guaranteed senior secured notes in 2010, with a yield of 12.5 percent. According to its 2012 financial report, the company had an option to entirely or partly redeem the notes on or after July 8, 2013.

Merrillees said the company expected to offer the new debt papers with an interest rate of around 7 to 7.5 percent.

Berau’s shares, traded under the code BRAU, closed at Rp 192 apiece last Friday, increasing by 0.52 percent from the previous day.

 

 

 

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