UPDATE 1-CIC pulls out of Bumi's $362 mln share sale -source

* CIC pulls out of Bumi share placement - source

* Credit Suisse, JP Morgan standby buyers for stake - source

* CIC still looking to do partnership with Bumi - source (Adds quotes, background)

By Janeman Latul

JAKARTA, Sept 24 (Reuters) - Sovereign wealth fund China Investment Corp (CIC) has pulled out of a debt-for-equity swap with Bumi Resources (BUMI.JK) because of disagreement over terms, said a source with direct knowledge of the deal on Friday.

The decision by CIC [CIC.UL] is a setback for Bumi which had hoped to swap some of the $1.9 billion in debt that it borrowed from CIC last year into equity in order to reduce its gearing. [ID:nJAK416278]

Bumi had originally planned for CIC to buy its entire $495 million share placement, sources told Reuters in June, but the coal miner has since scaled back the size of the deal to raise $362 million, priced at 2,366 rupiah per share. For most of the period since June, when talks between the two parties started, however, Bumi's share price has traded below 2,000 rupiah.

"CIC decided to pull out from the deal because of the difference in the share price," said the source.

"They are a sovereign wealth fund and it's hard for them to accept Bumi's premium."

Dileep Srivastava, head of investor relations at Bumi, declined to comment.

"We will disclose the buyers two days before the listing on October 5" of the new shares, Srivastava told Reuters.

CIC is the second potential buyer to pull out of the share placement deal after Raiffeisen Zentralbank Osterreich AG said in June that it was not interested in taking a stake in Bumi. [ID:nJAK479415]

The source, who declined to be quoted by name, said that Credit Suisse (CSGN.VX) and JP Morgan (JPM.N) will take up the share placement.

"There are real buyers behind Credit Suisse and JP Morgan. Investors who are interested in Bumi's assets," said the source who declined to give details.

JP Morgan declined to comment, while Credit Suisse could not be reached for comment. (Reporting by Janeman Latul; Editing by Sara Webb)