JAKARTA (TheInsiderStories) – Coal miner, PT Bumi Resources Tbk (IDX: BUMI) has paid a total US$327.82 million and interest $132.02 million of its Tranche A principal including accrued and back interest, said the company today (07/08). It said, the next quarterly payment for Tranche A is due on Oct 2020.
“With this 10th quarterly payment today, the company has now paid a total $327.82 million in cash consisting of Tranche A principal of $195.8 million and interest of $132.02 million including accrued and back interest,” said the miner in an official statement.
On July 8, 2020, BUMI has pay off the ten installments worth of $6.51 million for the Tranche A. The coupons from April 11, 2018 till July, 8, 2020 on Tranches B and C are also being capitalized.
In April of this year, the miner has paid the ninth installment worth of $7.51 million. Last year, one the largest coal producer in Indonesia, has paid over than $300 million of its Tranche A loan.
In 2019, the unit of Bakrie Group has made a deal with some of its creditors to solve the company’ debts. In the agreement, the company must issues 1.99 billion new shares as a new secured facility that consists of three tranches. The tranches A and B facilities valued $600 million respectively while Tranche C is $406.9 million.
The $2.6 billion debt depreciation was achieved thanks to a number of ways. First, the conversion of $2.0 billion in debt to equity at the price of Rp926.16 per share. Second, BUMI issues mandatory convertible bonds (MCB) with a duration of seven years. The total MCB emitted was valued at $600 million.
Since its debt restructuring in December 2017, Moody’s estimates BUMI has repaid around $200 million of principal under its Series A notes and Tranche A facilities as of the end of 2019, considerably lower than Moody’s initial expectation of around $300 million to $500 million repayment over this period.
This slower-than-expected pace of debt reduction has primarily been driven by declining coal prices, a price cap on domestic coal sales to electric utilities since 2018, and dividends being received from only one of its two major coal mining subsidiaries instead of both.
As a holding company, BUMI is reliant on dividends from subsidiaries, primarily its 51 percent-owned subsidiary, PT Kaltim Prima Coal (KPC), to service its debt. The company’ 90 percent-owned unit, PT Arutmin Indonesia has yet to pay dividends, but the Bakrie-owned company expects it to start paying dividends in the second half of 2020.
Still, Arutmin has certain outstanding liabilities it needs to pay off before it can initiate dividend payments. Assuming benchmark Newcastle thermal coal price of $65 – $70 a metric ton (MT), Moody’s expects the miner to continue to meet the approximate $30 million annual cash interest payments on Tranche A along with around $35 million in Tranche A principal in 2020.
However, BUMI will remain current on its cash interest payments, the majority of its debt carries payment-in-kind interest, which is accrued and added to the principal amount of debt.
“As a result, we expect BUMI’ aggregate reported debt balance of around $1.8 billion as of January 2020 will continue to rise, leading to an unsustainable capital structure as its debt maturities approach in December 2022,” adds Hasnain.
Bumi Resources, through its majority-owned subsidiaries, is the country’ largest thermal coal producer. The company produced around 86 MT of coal in 2019. Its principal assets include a 51 percent stake in KPC and a 90 percent stake in Arutmin.
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