* Restructuring plan focuses on cost-cutting, debt refinance
* Will curtail production if coal prices fall further
* ARMS to distribute $400 mln via dividend or shares scheme
(Adds chief executive comments, details restructuring plan)
By Silvia Antonioli
LONDON, March 28 Asia Resource Minerals, the
Indonesian miner emerging from years of bitter shareholder
in-fighting, said on Friday it would now focus on restructuring
its business to combat weak coal prices.
ARMS, previously known as Bumi, finally reached a deal on
Tuesday of this week to split with co-founding family the
Bakries and begin the process of rebuilding a company that has
seen its shares drop almost 80 percent as boardroom rows and
allegations of wrongdoing exacerbated a tough trading climate.
London-listed ARMS owns 85 percent of PT Berau,
Indonesia's fifth producer of thermal coal - used in power
generation - and now plans to cut exploration and mining costs
to counter falling prices that caused its 2013 core profit to
"We now look forward to maximising the opportunity at PT
Berau as we begin a new chapter in the company's life," said
chief executive Nick von Schirnding.
"In the continuing weak environment for thermal coal prices
we remain resolutely focused on cost reduction and asset
ARMS also intends to slash contractor rates and reduce fuel
usage while refinancing debt at a lower interest rate.
The miner has said it plans to boost output growth by 10
percent in 2014, subject to negotiations with Indonesia on
increasing the quota on the export of thermal coal.
But von Schirnding reiterated on Friday that ARMS would
curtail production promptly should coal prices fall further and
make some output unprofitable.
"This is all about mining profitably and should we see
further weakness in coal price, yes, we will curtail production
with no hesitation," von Schirnding said.
ARMS was founded in 2010 by the Indonesian Bakrie family and
financier Nat Rothschild, with the aim of giving London
investors access to promising Indonesian coal assets.
Since its creation however, coal prices have been battered
by excess supply and weakening demand growth from emerging
markets. About 20 percent of the world's producers are currently
loss-making, according to industry sources, and coal miners
around the world have closed mines and cut staff.
Against this backdrop, the relationship between the Bakries
and Rothschild soured and the company was battered by boardroom
battles and recriminations on all sides.
When ARMS announced its long-awaited split with the Bakries
on Tuesday, it sparked bitter posts on Twitter between a Bakrie
family member and Rothschild, a member of a prominent dynasty of
Von Schirnding said on Friday he was "confident the company
was in a better position to deliver value to our shareholders"
but when asked by journalists whether 2014 was ARMS' toughest
year so far, responded: "I think it is."
ARMS posted earnings before interest, tax, depreciation and
amortisation (EBITDA) of $176 million in 2013 - 45 percent below
the previous year despite the company increasing production by
almost 12 percent to 23.5 million tonnes of coal.
It has not given any earnings outlook for 2014, but has said
it intends to distribute $400 million to shareholders, either by
a straightforward dividend or through a B shares scheme, which
is potentially more tax-efficient for shareholders.
ARMS is also looking to refinance $450 million in bonds due
to expire in 2015 hoping to obtain a lower interest rate.
Shares in the company were up 1.2 percent by 1305 GMT, in
line with the broader mining sector.
(Editing by Sophie Walker)