UPDATE 1-Credit Suisse arranging new loan for Bakries-sources
22 Oktober 2008 15:12:06 (GMT+07:00)
Provided by: Reuters News
(Adds quoates, detail, background)
JAKARTA Oct 22 (Reuters) - Credit Suisse <CSGN.VX> is arranging a
new loan package for a holding company of Indonesia's Bakrie family, according
to sources close to the matter, in a deal meant to help the group repay around
$1 billion of debt.
PT Bakrie & Brothers Tbk <BNBR.JK>, the holding company controlled
by Indonesia's wealthiest family, said this month it hoped to raise $1.2
billion by selling off assets, including a stake in coal company Bumi Resources
<BUMI.JK>. Proceeds would be used to pay off its debt.
But with Indonesia's financial markets in deepening turmoil, it may
prove difficult to sell assets quickly, which has prompted its financial
adviser to seek new money.
Bakrie & Brothers said in a statement earlier this month that a
$1.1 billion loan, of which it has paid back $70 million, matures in April
2009.
Credit Suisse has approached several hedge funds about loaning more
money to the Bakrie group, in case Bakrie is unable to raise the money needed
for its hedge fund lenders by April. The new loan facility would allow the
Bakries to refinance debt and give it more breathing room beyond the April
deadline.
"They have announced they need to sell the stake, but at the same
time they also need to refinance debt," one source familiar with the deal told
Reuters.
The sources did not want to be named because they were not
authorised to speak publicly about the process.
A Bakrie spokesman and Credit Suisse declined to comment.
MARKET FEARS
Fears about a possible Bakrie default prompted the authorities to suspend
trading in the shares of six Bakrie companies in early October, weighing on the
broader market and contributing to its closure for three days.
Aburizal Bakrie is Indonesia's chief social welfare minister, and
an important figure in the Golkar Party, which is a key part of President
Susilo Bambang Yudhoyono's coalition. The government could come under attack
from opposition parties ahead of next year's elections if the Bakrie group gets
any kind of preferential treatment.
Indonesia's Globe magazine ranked Aburizal Bakrie as the country's
richest man, with a $9.2 billion fortune.
Already, signs that several state-owned companies are being
encouraged to buy shares in the group have prompted criticism in the media.
Credit Suisse has a long relationship with the Bakries both on the
corporate and private banking side and is advising on the sale of other Bakrie
assets, sources have told Reuters.
Reuters reported on Friday that Indonesian private equity firm
Northstar Pacific and hedge fund Farallon Capital were among the companies
interested in a stake in Bumi Resources. Bakrie entities own 20 percent of Bumi
Resources, Indonesia's top coal miner, according to Reuters data. Through
direct and indirect holdings, the Bakries own around 35 percent of Bumi,
sources say.
COLLATERAL DAMAGE
The Bakrie group borrowed the $1.1 billion last year, using shares of Bumi
Resources as collateral for the loan. As of last June, shares of the coal
company were soaring and briefly held the largest market value on the
Indonesian stock exchange.
Bumi shares have since tumbled 75 percent and are currently
suspended. Its market capitalisation is now $4.3 billion, meaning a 35 percent
Bakrie stake is worth around $1.5 billion.
Bakrie & Brothers also has stakes in plantation firm PT Bakrie
Sumatera Plantations and property company PT Bakrieland Development Tbk
<ELTY.JK>. The family has signaled it is willing to sell stakes in those
companies as well to pay back the debt.
But it is Bumi Resources that has drawn the most attention from
suitors, including from rival coal mines in Indonesia, mainly because of
attractive coal prices and the company's relatively clean balance sheet.
One banker close to the matter said that as part of the
refinancing, the Bakries could again borrow through its shares in Bumi
Resources.
The Bakrie group has expanded rapidly in recent years as interest
rates declined and commodity prices surged. But with the sharp sell-off in
global financial markets this month, traders have grown increasingly worried
about the group's debt levels.
Last week, Bakrie & Brothers said U.S. hedge fund Avenue Capital
had increased its stake in Bakrieland by around 15 percent, paying around $46
million to Bakrie & Brothers.
(Reporting by Sara Webb, Harry Suhartono, Saeed Azhar, and Michael
Flaherty; Editing by Bill Tarrant)
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