Vallar Says Expects to Complete Bumi Stake Increase in May

Vallar Plc (VAA), Nathaniel Rothschild’s investment vehicle, expects to complete a stake increase in PT Bumi Resources of “close to” 50 percent through a share-swap deal by May 10, the company’s executives said. 

Vallar, which completed the acquisition of a 25 percent stake in Bumi last month, will offer to swap 57.7 shares of Indonesia’s largest coal producer for a share of Vallar, Daren Morris, a co-founder of Vallar, said in Jakarta today. 

“Under an ideal scenario in an ideal world we would end up owning close to 50 percent of Bumi, which would really cement the relationship between Bumi and Vallar,” Rothschild, co- chairman of the Jersey, Channel Islands-based company, told reporters. “I think from a stock market perspective the U.K. investors would like to see that.” 

Vallar agreed in November to invest $3 billion in Bumi and PT Berau Coal Energy in a stock and cash transaction to tap access to a growing mining sector in Indonesia, the world’s largest thermal-coal exporter, amid rising demand for the fuel from India and China. Vallar will be renamed Bumi Plc and is expected to be listed on the FTSE 100 Index (UKX) on the London Stock Exchange in May, Morris said. 

Bumi is planning to repay the first tranche of debt to China Investment Corp. ahead of schedule in October this year, while continuing its business relations with the Chinese sovereign wealth fund, Rothschild said. 

“I think given the Chinese appetite for resources, they have strong desire to build on the relationship they have already got with this group,” he said. “The level of leverage in Bumi is not an issue at all; the issue obviously is the cost of debt could be a lot lower.” 

Bumi plans to repay early $600 million of debt due October 2013 to CIC as part of the company’s aim to reduce debt by $1 billion this year, Director Dileep Srivastava said Feb. 7.

Tender Offer

Vallar, which completed acquiring a 75 percent stake in Berau Coal April 8, may offer this month to buy an additional stake in the company at 540 rupiah (6 U.S. cents) apiece, Morris said. 

Vallar may keep a 5 percent stake of Berau Coal free-float in the market after the tender offer and is planning to increase it to 20 percent within the next two years, to comply with Indonesian regulations, he said. 

Vallar agreed to buy 26.2 billion shares of Berau Coal at 540 rupiah each or for a total of 14.1 trillion rupiah from PT Bukit Mutiara, PT Recapital Securities, which helped arrange the share sale, said in a statement to the stock exchange on April 6.

Bakrie’s Stake

Bakrie Group, the owner of Bumi, and Bukit Mutiara, received shares in Vallar as part of the transactions. Bakrie Group now owns about 54.6 percent and Bukit Mutiara has about 13.2 percent in the company, Vallar said in a statement April 8. 

Rothschild was most recently co-chairman of New York-based hedge-fund firm Atticus Capital LLC and the only son of British financier Lord Jacob Rothschild. Vallar raised 707.2 million pounds ($1.2 billion) in an initial public offering on the London Stock Exchange in July. 

Bumi was unchanged at 3,250 rupiah at 1:46 p.m. in Jakarta trading. The stock has risen about 7 percent this year, compared with the 1.3 percent gain on the benchmark Jakarta Composite Index. (JCI) Berau fell 1.8 percent to 550 rupiah. Source: Reuters