JAKARTA: Indonesia's powerful but debt-ridden Bakrie family announced Tuesday it will sell half its stake in the London-listed Bumi Plc, a thermal coal joint venture with billionaire investor Nathaniel Rothschild.
Coking coal producer Borneo Lumbung Energi & Metal (BORN) will buy a 23.8 percent from the family's Bakrie Group conglomerate for $1 billion at 10.91 British pounds per share.
"In forming this partnership, Bakrie Group has strengthened its balance sheet and returned stability to its shareholding in its Indonesian listed flagship PT Bakrie & Brothers Tbk and in Bumi Plc", Bakrie Group chairman Nirwan D. Bakrie said in a statement.
Under the deal, to be finalised by the year-end, Bumi will transfer its 47.6 percent stake to a 50-50 joint venture with BORMN.
The Bakrie family has struggled to pay back various debts, taking out a loan of $1.35 billion with Credit Suisse to restructure its repayments.
The loan must be repayed by March 2012, but was recalled early last month when Bumi's shares plummeted.
The company statement said that the Bakrie Group's overall debt "will be considerably reduced in relation to the Bumi Plc shareholding".
"This is a win-win transaction for all parties concerned," Bumi Resources spokesman Dileep Srivastava told AFP.
"We get exposure to coking coal, the share refinancing issue disappears and it raises the potential of all-round higher value accretion."
BORN president director Samin Tan said in a statement that his company's shareholders would vote on the acquisition at a meeting on Dec. 15.
"Through this transaction, BORN will gain access to the growing thermal coal industry through a well-established major platform," Tan said.
The Bakrie companies are controlled by the family of Aburizal Bakrie, one of Indonesia's richest men and head of Golkar, a major political party.
Bakrie, the family patriarch, is believed to control the family empire, although he has distanced himself publicly from the business since he entered politics.
He will likely contest the 2014 presidential election.
Bakrie has been accused of corruption and poor governance in companies linked to his family, particularly for evasion of millions of tax dollars.
Another Bakrie-linked company, Lapindo Brantas, has failed to properly compensate thousands of victims left homeless when a mud volcano erupted in East Java close to the company's gas well.
The volcano has spewed toxic mud continuously since 2006.
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