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UPDATE 1-Accountant says Asia Resource Minerals needs refinancing to secure future
August 28, 2014 / 3:21 PM / 3 years ago

UPDATE 1-Accountant says Asia Resource Minerals needs refinancing to secure future

* H1 underlying loss $64 mln vs $45 mln loss H1 2013

* Company hopes for coal prices above $80/tn in 2015

* Shares price down 80 pct since 2010 listing

* Company says it is confident it can refinance soon (Adds detail, company comment on proposed financing)

By Silvia Antonioli

LONDON, Aug 28 (Reuters) - Asia Resource Minerals (ARMS), the Indonesia-focused miner formerly known as Bumi Plc, needs to refinance its debts soon in order to survive, its accountants said on Thursday, as the company posted a deeper first-half underlying loss.

ARMS has been dogged by shareholder battles and mutual accusations of wrongdoing since it listed in London in 2010. This, combined with a steep decline in coal prices hit by oversupply and sluggish demand, has since led to an 80 percent tumble in its share price.

The company now needs to refinance to repay $450 million in outstanding notes due in July 2015 but postponed a bond issue this month, citing adverse market conditions.

It said on Thursday that it hopes to proceed with the placement between the end of this year and early 2015, depending on market conditions, but is also considering other options.

“As a consequence of the group not refinancing ... the group does not have committed borrowing facilities to meet its working capital requirements for at least the next 12 months,” said accountant PricewaterhouseCoopers, which reviewed the company’s results.

“This condition ... indicates the existence of a material uncertainty, which may cast significant doubt about the group’s ability to continue as a going concern.”

ARMS directors said in the results statement that they are confident that “the refinancing will be forthcoming on acceptable terms when market conditions permit”, based on coversations with banks, bondholders and ratings agencies.

The company is also considering other funding options, including bank financing.


ARMS posted a first-half underlying loss of $65 million, against a $45 million loss a year ago, battered by depressed coal prices and rising costs.

Its average selling price for thermal coal in the first half of the year fell to $56.50 a tonne from $61.40, but the company is hoping for a recovery to above $70-72 a tonne for the Newcastle benchmark this year and above $80 in 2015.

The company has been undergoing a restructuring that left it owning only one asset, its Berau operation in Indonesia, and led to boardroom changes including the removal of London-based chief executive Nick von Schirnding.

Its focus is now to cut costs to prepare for worst-case scenarios, said recently appointed Chief Executive Amir Sambodo.

“I can reassure shareholders that despite the changes at management and board level over recent months, we remain resolutely focused on the continued delivery of our strategy, in particular reducing costs,” said Indonesia-based Sambodo, who was already president director of Berau before being appointed ARMS CEO in June.

Moving the CEO role from London to Indonesia and combining it with that of Berau president has made the decision-making process quicker and produced results such as the negotiation of a 15 percent discount with one of the company’s main contractors, Sambodo said. (Editing by Mark Potter and David Goodman)

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