Glencore may take over Bumi Plc

Glencore International Plc, the world's largest publicly traded commodities supplier, may consider buying a stake in Indonesian coal producer Bumi Plc.

PT Bakrie & Brothers Tbk, with 47 percent of Bumi, breached two conditions of a US$1.35 billion bridge loan with Credit Suisse Group AG and a group of investors in recent weeks, putting it in default.

The lenders and borrower are discussing options including a combined refinancing, asset sale and extension of the loan. A sale of a stake in Bumi, which has exposure to the world's largest and fastest-growing stand-alone export thermal coal business, is likely to generate considerable interest.

Glencore is the most obvious suitor, given its existing relationship with the Bakries and off-take agreement with Bumi. Indonesia's Bakrie Group is a palm-oil-to-property family empire founded in 1942 by Bumi Chairman Indra Bakrie's father.

Bakrie & Brothers said it's considering repaying or restructuring a US$597 million loan arranged by Credit Suisse, or a combination of the two option.

Glencore, Rothschild Credit Suisse may be entitled to take over the Bakrie's stake in Bumi should the loan default, according to last year's prospectus for Vallar Plc, as the company was known before its London initial public offering.

Bumi owns about 85 percent of PT Berau Coal Energy and a 29 percent stake in PT Bumi Resources. Bumi is trading about 25 percent below its IPO price, and its value has dropped by about a third since the end of June. Glencore bought a 4.8 percent stake in Bumi Resources last
June through a $200 million equity swap agreement with Bakrie & Brothers. Glencore sold $10 billion of new shares in an IPO in May to help repay debt and fund acquisitions.

Bumi, founded last year by Nathaniel Rothschild, reported underlying profit of US$54 million in the first half, driven by record thermal coal prices. Operating profit was $62 million on sales of US$478 million, the Jersey, Channel Islands-based company said on Aug. 17 in its first six-month earnings report.

Vallar sold 707 million pounds of new shares in last year's offering at 1,000 pence apiece. Bumi said in a statement this week the bridge loan was due for repayment in the near future and Bakrie & Brothers was in talks to restructure the facility.