UPDATE 1-China's CIC agrees $1.3 bn Bumi debt-for-equity swap
* CIC to convert $1.3 debt into stakes in Bumi firms and mine
* Deal to close by year-end (Adds detail, background)
By Saeed Azhar and Prakash Chakravarti
SINGAPORE, Oct 9 (Reuters) - China's sovereign wealth fund CIC has agreed to convert the $1.3 billion owed to it by Bumi Resources into a stake in the Indonesian miner and associated subsidiaries.
CIC ended its previous reluctance to agree a debt-for-equity swap because of the loss-making miner's worsening financial situation, a source familiar with the matter said.
Bumi Resources, Asia's biggest thermal coal exporter, had its debt rating downgraded in July by ratings agencies concerned over liquidity constraints faced by the group and the financial pressure of weak commodities markets.
The company has recently struggled to meet its debt maturities, forcing it to extend a $425 million loan maturity last month and refinance another loan at expensive terms in August.
Long a jewel the politically connected Bakrie family's business empire, Bumi Resources is part-owned by London-listed Bumi Plc and has been embroiled in shareholder battles for control of that firm and its assets.
The Bakries now plan to exit their investment in Bumi Plc, under a plan which has yet to be approved by shareholders, and use their shares in the London firm to take back control of the 29.2 percent holding in Jakarta-listed Bumi Resources.
The coalminer posted a 2012 net loss of $666 million and finished the year with $4 billion of debt.
The outstanding $1.3 billion of its $1.9 billion loan taken from CIC in 2009 will be swapped for 42 percent of Bumi Resources' 87 percent holding in its Bumi Resources Mineral subsidiary, plus stakes in Kaltim Prima Coal - Indonesia's biggest coalmine - and other assets, as well as up to $150 million in new shares in Bumi Resources, the Indonesian group said.
Additional debt resulting from interest and redemption charges will convert into a three-year loan at a competitive market rate, though Bumi did not disclose the size of this loan.
A CIC spokesman declined to comment on the deal, which Bumi Resources said would close by the end of the year.
Bumi bonds maturing in 2017 jumped 4-5 points ahead of the announcement on speculation of an imminent deal. (Additional reporting by Umesh Desai in Hong Kong and Koh Gui Qing in Beijing; Editing by Michael Flaherty and David Goodman)
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