* ARM said voting not appropriate given stake sale plan
* Deal with CIC cuts Bumi's debt by about 30 percent
* CIC gets 18 percent in Bumi Resources
By Fathiyah Dahrul and Eveline Danubrata
JAKARTA, Jan 10 Shareholders of Indonesia's Bumi
Resources, Asia's biggest thermal coal exporter,
approved a crucial $1.3 billion debt-for-equity swap deal with
China's sovereign wealth fund, CIC, even without the
presence of its largest owner.
Only one-third of shareholders were required to approve the
deal after the Indonesian company delayed a previous vote from
"I hope the deal will be final before Chinese New Year, this
month," Andrew Beckham, a director at Bumi Resources, said.
A collapse of the Chinese deal would have been disastrous
for Bumi Resources, which has suffered downgrades from ratings
agencies and faces a heavy debt burden even as coal prices
Asia Resource Minerals (ARM), which owns 29 percent
of Bumi Resources, said late on Thursday it would not attend the
shareholder meeting on Friday.
ARM, formerly known as Bumi Plc, said in a previous
statement that its participation in the vote would not be
appropriate, since its stake in Bumi Resources should soon be
transferred to the Bakrie Group as part of a complex separation
of ARM from the influential Bakrie family that co-founded it in
Under the deal, the Bakrie family is to sell its stake in
ARM to outgoing chairman Samin Tan and buy back ARM's stake in
PT Bumi Resources as part of a plan to revive the London-listed
company after it was battered by boardroom rows and weak coal
"I think from an Asia Resource Minerals' point of view, it
was a wise move not to take part to the vote, as it could have
been seen as conflicted because of the separation," a source
close to ARM said.
"The deal with CIC dilutes all other equity holders but also
takes debt off the balance sheet, which is beneficial. So if you
do the math, it's actually good for the shareholders."
Under the proposed deal, CIC will convert the $1.3 billion
owed to it by Bumi Resources into stakes of 19 percent in PT
Kaltim Prima Coal, 42 percent in Bumi Resources Minerals
and around 18 percent in Bumi Resources.
The transaction would cut Bumi Resources' total debt by 30
percent to $3.4 billion from a September 2013 level of $4.9
billion, according to a company presentation in December.
Bumi called the deal the "complete solution to most
expensive debt in the company's capital structure" and said it
would also lead to a "material reduction" in annual interest
costs and an improvement in free cash flow.
"If it goes through, it's good for everybody. If it doesn't
go through, it's bad for everybody," S&P analyst Vishal Kulkarni
said before the vote.
He said the deal was vital to cutting Bumi Resources' debt
service costs and that if it had not gone through or even been
delayed by three months, Bumi Resources would have had to line
up another source of funding or find a way to sell some assets.
Bumi Resources bonds were trading close to 70 cents on the
dollar, with those maturing in 2016 yielding 28.9
percent and those in 2017 24.1 percent. Both have
rallied from a low last August of 53 cents.