By Janeman Latul
JAKARTA, May 10 (Reuters) - Indonesian coal miner PT Bumi Resources has cut back an initial public offering of its non-coal mining assets to $500 million from $1 billion and plans to list the unit in August, sources told Reuters on Monday.
Bumi has picked Credit Suisse, JP Morgan and local broker PT Danatama Makmur to underwrite the IPO of PT Bumi Resources Mineral (BRM), which controls its gold, copper, zinc, lead and iron ore interests in Indonesia and Africa.
BRM owns a 24 percent stake in gold and copper miner PT Newmont Nusa Tenggara (NNT), a unit of U.S. miner Newmont Mining Corp, and nearly 100 percent of Herald Resources, which controls a large zinc and lead mine in Dairi, North Sumatra.
Sources told Reuters that the size of the planned IPO has been scaled back following discussions with investors and bankers about Bumi's asset valuations and gearing.
'The IPO will be conducted in the third quarter, some time in August,' said a source with direct knowledge with the matter.
Reuters reported in early April that Bumi wanted to list its non-coal mining assets which it valued at $1.9 billion, in a $1 billion initial public offering later this year.
CROWN JEWEL
Bumi, which has a stock market value of $4.8 billion, is the prize asset of the Bakrie group, a conglomerate controlled by the family of tycoon and politician Aburizal Bakrie.
'I think investor appetite decreased after they found that none of the non-coal assets except the Newmont mine in West Nusa Tenggara contributes to the company's earnings,' said Norico Gaman, head of research at PT BNI Securities.
'So, in terms of earnings and revenue the company (Bumi Resources Mineral) can't give anything for now.'
Analysts had seen the IPO as a way for Bumi, which has debts of $3.5 billion and total assets of $7.41 billion, to raise fresh cash.
'The company has a debt to equity ratio of 2.2, meaning the company is highly leveraged, so I think it's a part of Bumi's plan to reduce its debt even if it fails to raise up to $1 billion,' Gaman added.
Some analysts predict that Bumi may seek the participation of China Investment Corp, the Chinese sovereign wealth fund, as a substantial investor in the IPO.
Bumi late last year signed a $1.9 billion loan with CIC, most of which it used to finance the expansion of its non-coal assets.
One source involved in the deal said the capital-raising from the IPO plan had been scaled back to only about $500 million from $1 billion, because of concerns about fair valuation.
'It's also related to investors concerns due to its high exposure to the debt market,' the source added.
Dileep Srivastava, Bumi's investor relations director, declined to comment on the matter.
'Nothing is fixed yet. BRM has a new management. When they are ready, they will announce the plan officially to the public,' he told Reuters.
NEW DEAL
Gaman said that in the long term, Bumi will benefit from the recent political developments, particularly the departure of finance minister and lead reformer, Sri Mulyani Indrawati, and the appointment of Aburizal Bakrie as the manager of the President Susilo Bambang Yudhoyono's coalition.
Under Indrawati, the tax office had investigated two Bumi units for tax evasion, dealing a blow to the stock.
The question now, many analysts say, is whether those tax investigations will be pursued after Indrawati's move to the World Bank in June.
'Its tax issue may be dropped and it will boost investor confidence to the stock,' Gaman said.
Indonesian tax authorities allege Bumi and its two coal units, PT Kaltim Prima Coal and PT Arutmin Indonesia, owe about 2.1 trillion rupiah ($228.6 million) in tax.
Tjiptarjo, director general at the tax office, has said the penalty would be four times the value of the taxes owed.
Shares in Bakrie group companies rose on Monday, with shares in Bumi up 7.6 percent, against a broader market rise of 4.1 percent.
In terms of price-earnings ratio, Bumi shares look more expensive than its rivals, trading at 24.3 times, against 16.5 for PT Adaro Energy and 14.5 for PT Tambang Batubaru Bukit Asam.
($1=9185 Rupiah)
(Editing by Sara Webb) ((If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com) Keywords: BUMIRESOURCES INDONESIA/ (janeman.latul@thomsonreuters.com, Reuters messaging: janeman.latul.reuters.com@reuters.net; +6221 384 6364) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
JAKARTA, May 10 (Reuters) - Indonesian coal miner PT Bumi Resources has cut back an initial public offering of its non-coal mining assets to $500 million from $1 billion and plans to list the unit in August, sources told Reuters on Monday.
Bumi has picked Credit Suisse, JP Morgan and local broker PT Danatama Makmur to underwrite the IPO of PT Bumi Resources Mineral (BRM), which controls its gold, copper, zinc, lead and iron ore interests in Indonesia and Africa.
BRM owns a 24 percent stake in gold and copper miner PT Newmont Nusa Tenggara (NNT), a unit of U.S. miner Newmont Mining Corp, and nearly 100 percent of Herald Resources, which controls a large zinc and lead mine in Dairi, North Sumatra.
Sources told Reuters that the size of the planned IPO has been scaled back following discussions with investors and bankers about Bumi's asset valuations and gearing.
'The IPO will be conducted in the third quarter, some time in August,' said a source with direct knowledge with the matter.
Reuters reported in early April that Bumi wanted to list its non-coal mining assets which it valued at $1.9 billion, in a $1 billion initial public offering later this year.
CROWN JEWEL
Bumi, which has a stock market value of $4.8 billion, is the prize asset of the Bakrie group, a conglomerate controlled by the family of tycoon and politician Aburizal Bakrie.
'I think investor appetite decreased after they found that none of the non-coal assets except the Newmont mine in West Nusa Tenggara contributes to the company's earnings,' said Norico Gaman, head of research at PT BNI Securities.
'So, in terms of earnings and revenue the company (Bumi Resources Mineral) can't give anything for now.'
Analysts had seen the IPO as a way for Bumi, which has debts of $3.5 billion and total assets of $7.41 billion, to raise fresh cash.
'The company has a debt to equity ratio of 2.2, meaning the company is highly leveraged, so I think it's a part of Bumi's plan to reduce its debt even if it fails to raise up to $1 billion,' Gaman added.
Some analysts predict that Bumi may seek the participation of China Investment Corp, the Chinese sovereign wealth fund, as a substantial investor in the IPO.
Bumi late last year signed a $1.9 billion loan with CIC, most of which it used to finance the expansion of its non-coal assets.
One source involved in the deal said the capital-raising from the IPO plan had been scaled back to only about $500 million from $1 billion, because of concerns about fair valuation.
'It's also related to investors concerns due to its high exposure to the debt market,' the source added.
Dileep Srivastava, Bumi's investor relations director, declined to comment on the matter.
'Nothing is fixed yet. BRM has a new management. When they are ready, they will announce the plan officially to the public,' he told Reuters.
NEW DEAL
Gaman said that in the long term, Bumi will benefit from the recent political developments, particularly the departure of finance minister and lead reformer, Sri Mulyani Indrawati, and the appointment of Aburizal Bakrie as the manager of the President Susilo Bambang Yudhoyono's coalition.
Under Indrawati, the tax office had investigated two Bumi units for tax evasion, dealing a blow to the stock.
The question now, many analysts say, is whether those tax investigations will be pursued after Indrawati's move to the World Bank in June.
'Its tax issue may be dropped and it will boost investor confidence to the stock,' Gaman said.
Indonesian tax authorities allege Bumi and its two coal units, PT Kaltim Prima Coal and PT Arutmin Indonesia, owe about 2.1 trillion rupiah ($228.6 million) in tax.
Tjiptarjo, director general at the tax office, has said the penalty would be four times the value of the taxes owed.
Shares in Bakrie group companies rose on Monday, with shares in Bumi up 7.6 percent, against a broader market rise of 4.1 percent.
In terms of price-earnings ratio, Bumi shares look more expensive than its rivals, trading at 24.3 times, against 16.5 for PT Adaro Energy and 14.5 for PT Tambang Batubaru Bukit Asam.
($1=9185 Rupiah)
(Editing by Sara Webb) ((If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com) Keywords: BUMIRESOURCES INDONESIA/ (janeman.latul@thomsonreuters.com, Reuters messaging: janeman.latul.reuters.com@reuters.net; +6221 384 6364) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.