Berni Moestafa & Yoga Rusmana
Bumi Resources said a probe by Bumi Plc, the London-listed shareholder founded by Nathaniel Rothschild, and subsequent “leaks” about the matter are an attempt to damage the Indonesian coal producer.
“The present situation is unfortunate and is an internal issue between a few shareholders who have chosen to go external, managing media through innuendo,” Bumi Resources director Dileep Srivastava said in an e-mailed statement. “This appears to be an attempt to damage the inherent value of our business by orchestrating internal issues and leaking them publicly, for motives which appear dubious.”
Bumi Plc, which owns 29 percent of the Jakarta-based miner, said on Monday that it began investigating “potential financial and other irregularities” and hired lawyers to look into a $637 million writedown of development funds and exploration assets.
Moody’s Investors Service changed its outlook on Bumi Resources to negative from stable on Tuesday, while Standard & Poor’s cut its long-term rating by a step to B+ the next day.
“The Bumi issue has made foreign investors question whether corporate governance has become an area of concern once again,” said Soni Wibowo, vice president at Jakarta-based Bahana TCW Investment Management, which owns Bumi Resources shares. “We don’t think it is an issue. Indonesia’s corporate governance has improved a lot, especially among the big caps.”
Bumi Resources was unchanged, closing at Rp 730 in Jakarta on Friday. The stock has plunged 66 percent this year, compared with an 11 percent gain in the benchmark index. Bumi Plc fell 5.7 percent to 147.1 pence at the close in London yesterday.
The probe is the latest turn in a dispute involving Rothschild and Indonesia’s Bakrie family since they agreed to a $3 billion deal in 2010.
Bumi Resources said on Wednesday it hadn’t received any advance notice about the probe. A spokesman for Bumi Plc in London declined to comment.
Events may hamper Bumi Resources as it seeks to refinance debt in the next year, S&P and Moody’s said. The company has $3.95 billion of debt, with $300 million due in the next year, Moody’s said. S&P put the figure at $400 million.
“There is no significant debt that is due before end-2013, so we are not sure where the true concern lies,” Srivastava said.
The investigation will focus on “extensive” development funds at Bumi Resources and an asset in Berau Coal Energy, another coal holding, which were marked down to zero in the accounts of Bumi Plc as of Dec. 31, Bumi Plc said. It gave no figures for the writedown at that time.
The Indonesia Stock Exchange (IDX) sent letters to Bumi Resources and Berau on Thursday asking them to provide details of the matter to shareholders by Oct. 2, said Uriep Budhi Prasetyo, a compliance director at the exchange. The Indonesian capital-markets regulator said on Wednesday that it would wait for the results of Bumi Plc’s probe before taking any action.