JAKARTA/SINGAPORE Oct 15 PT Bakrie & Brothers
is in talks to sell a pipe making unit for $100
million, sources said, a step by the powerful Bakrie family to
engineer a split from financier Nat Rothschild and Bumi Plc, the
London-listed miner they co-founded two years ago.
Under a surprise proposal last week to the Bumi Plc board,
the Bakrie group plan a share swap and a buy-back of coal assets
that would allow them to dismantle the company they had created
First, the Bakries must repay $437 million in debt arranged
by Credit Suisse. Then, they must build a war chest of $1.2
billion to buy the coal mines from Bumi Plc.
"The Bakries are aware that they need to settle outstanding
debt before raising more money," said a source with direct
knowledge of the plan.
"But they are survivors, veteran soldiers in the financial
world .... They will pay their existing debt by selling assets
before raising new debts," the source said.
The Bakrie plan to quit Bumi Plc follows rising tensions
among leading shareholders, exacerbated in September when the
London firm launched an investigation into suspected financial
irregularities at its Indonesian operations.
Bakrie & Brothers, an investment company controlled by the
Bakrie family, agreed with creditors to repay the $437 million
debt due by January 2013 after a covenant on the debt was
The loan was backed by the Bakrie's 23.8 percent stake in
Bumi Plc and when Bumi shares fell earlier this year, the
covenant was triggered.
The Indonesian group agreed with lenders in September to add
new collateral to back the value of the loan before it sells
some assets to repay the debt.
The new collateral is stakes in unlisted companies,
including Bakrie Pipe and its unit PT Southeast Asia Pipe,
fiber-cement producer PT Bakrie Building Industries and auto
parts maker PT Bakrie Tosan Jaya.
Bakrie & Brothers aims to raise around $100 million from the
sale of Bakrie Pipe and it hopes to refinance another $94
million, sources said.
They declined to identify who is holding the purchase talks
with Bakrie & Brothers. The investment firm was not immediately
available for comment.
A Bakrie family investment vehicle, Long Haul Holding Ltd,
will repay the remaining $243 million of the $437 million,
banking sources said.
Bakrie Pipe Industries, which provides steel pipes for oil
and gas companies, controls around 60 percent of domestic market
share with annual capacity of 200,000 metric tonnes, according
to a Bakrie & Brothers' presentation.
"The Bakries will not sell its publicly listed units to pay
the debts because if they sell it now then they will have to
sell it at a loss," said one of the sources familiar with the