Bumi trading suspended pending Berau review

Raras Cahyafitri, The Jakarta Post, Jakarta | Business | Tue, April 23 2013, 1:55 PM

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Paper Edition | Page: 13

Troubled London-listed Bumi plc requested a suspension of trading in its shares on Monday as a consequence of a prolonged financial review of its Jakarta-listed subsidiary PT Berau Coal Energy.

Bumi said it filed a request for the suspension with the UK listing authority effective on Monday until the disclosure of its audited financial reports.

“The company’s priority and focus is the production of results at the earliest possible date in May,” Bumi said in an announcement.

Coal-mining group Bumi is currently plagued by a dispute between its main shareholders, Indonesia’s Bakrie family and British financier Nathaniel Rothschild.

The company was supposed to release its full-year report before the end of April. However, it said that more time was needed as the company was still working to audit 84.7 percent-owned Berau, which is now under new management.

Bumi said the new management was unable to verify a number of expenditure items, including expenditure on the development of hauling roads and overburden removal amounting to around US$56 million last year as well as $38 million in transactions relating to payments to landowners.

“If [...] expenditures cannot be substantiated, Berau is seeking undertakings from any responsible parties that it will be properly compensated for the financial impact,” Bumi said.

Shares in Bumi traded at 254.58 pence ($3.87) last Friday. The share price fell by around 68 percent during 2012 as a result of the dispute between shareholders and alleged financial irregularities. Shares in the company have dropped by around 5 percent from the beginning of the year to Friday.

Meanwhile, shares in Berau (BRAU) closed at Rp 220 (2 US cents) in Jakarta on Monday, a decline of 2.22 percent compared to a day earlier.

The Indonesia Stock Exchange (IDX) was unlikely to suspend trading in Berau, according to IDX listing director Hoesen, unless the company failed to meet the deadline for the submission of its financial report.

“There is a three-month period after the deadline of the end of March. If the company fails to disclose the report by the end of June, it will be suspended,” Hoesen said.

Bumi expects that the delay in the financial disclosure and review of Berau will not have significant implications for the Indonesian unit’s operations. Berau mined 21 million tons of coal last year. The company is expecting to report 23 million tons in production this year.

Bumi CEO Nick von Schirnding said that the review of Berau was expected to “resolve all residual financial issues”.

“While clearly the above findings are disappointing, it does reflect the fact that we are taking a grip and turning the corner with independent management in place at both Berau and Bumi plc. It is far preferable to achieve certainty and allow us then to move on with a clean slate,” von Schirnding said in a written statement.

As the “cleaning out” in Berau takes place, Bumi also continues work on the separation of its other Indonesian unit, PT Bumi Resources. Bumi owns a 29.2 percent stake in Bumi Resources.

The Bakrie Group, one of the Indonesian shareholders in the London company, is planning to exchange its indirect 23.8 percent in Bumi with a stake in Bumi Resources in a share swap and cash transaction worth $278 million.

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