WEBODIGY Business & Finance Journal

No one else shares the spotlight with a very critical in Indonesian capital market universe as shares of PT Bumi Resources Tbk (BUMI), at least for now.

So critical, sometimes mistaken perception of follow-up facts. Yes, the storm rumors incessant strikes solid buildings owned conglomerate that had ranked the richest man in Indonesia, Aburizal Bakrie.

PT Bakrie & Brothers Tbk (BNBR) claim still holds 16% stake BUMI. But data PT Indonesian Central Securities Custodian (KSEI) recorded no single company or investors who own shares BUMI more than 5%. Apart from that, hard to let go of BUMI from the association with the Bakrie group.

And maybe that’s why the rumors and speculation as if a friend who lived closest to the BUMI. Because the parent did not escape the rumors an attack.

But what could I do, step and Bakrie group business strategy is often controversial. Doings of brave nan extreme behavior Bakrie group has been blamed to be one cause of the stock market collapse in 2008. But Bakrie Group’s success in making money also departs from the same strategy.

So was the BUMI. Largest coal companies in Indonesia as well as the largest coal exporter in the world, are now facing a myriad of questions and speculation market players due to the action of debt to U.S. $ 3.325 billion, which may increase again to the front.

BUMI accused of reckless action by the debt. Market participants then talked position BUMI debt burden, its impact on short-term performance of the company, until mengkait-kaitkannya with political campaign funds Aburizal Bakrie.

“Many people do not understand their own and then speculate about what we were doing. Even to this loan pointing to a political fund. It is not logical,” said SVP Investor Relations BUMI, Dileep Srivastava, in talk with detikFinance bincangnya, Monday (7 / 12 / 2009).

According to Dileep, speculation and rumors that developed among market participants do not have a clear basis. Especially about the position of the debt burden as often discussed BUMI market participants.

“People tend to see the impact that occurred within the short term, rather than see what we achieve and the benefits we would give our shareholders in the future,” said Dileep.

Dileep acknowledged that the expansion scheme which is being prepared may be classified as extreme BUMI and too brave. But according to him, BUMI did it not without calculation.

“The situation is similar when we decided to take over the KPC (PT Kaltim Prima Coal) and Arutmin (PT Arutmin Indonesia). When that many say we are too desperate to expand,” said Dileep.

BUMI took over 80% stake in Arutmin from BHP Billiton in 2001. The remaining 20% which is owned by PT Indonesia Ekakarsa Yasakarya which is also the Bakrie family group company completed in 2004.

KPC formerly owned British Petroleum and Rio Tinto with their respective ownership of 50%. BUMI KPC took over completely in 2003.

BUMI which was then a small energy company piecemeal, as a form of business change from previous businesses in the tourism sector which manages the hotel business in Uzbekistan, then get a reaction from market participants.

“In the midst of current economic conditions, in which banks provided loans difficult unless a high-interest, people wonder why we take high interest loans and great value. Worth a total of about U.S. $ 1.1 billion,” said Dileep.

With a loan of it, certainly not a party which he doubted whether BUMI management can continue to grow with the burden of debt and interest expense to be borne.

“As a result, all people can prove. In the years 2007-2008, we paid all the debt of U.S. $ 1.1 billion and the BUMI into a big company with zero debt (zero debt), only with a 30% stake in KPC and Arutmin to Tata,” explained.

“You are investing billions of dollars and all return in just 4 years. Are there other companies that are able to do this other than BUMI?” he added.

Dileep optimistic attitude really justified. With investment of U.S. $ 1.1 billion that they say desperate, BUMI managed to pay off all at once scored EBITDA (earnings before interest, taxes, and amortization demortisasi) highest in the history of the company in 2008.

“BUMI to pay off the entire debt of U.S. $ 1.1 billion in 2008, along with increased production of up to 2-fold in 2008. And therefore, our EBITDA was the highest score ever achieved in the year 2008,” he said.

BUMI coal production of 40 million tons in 2003. In 2008, coal production rose to 52.8 BUMI million tons. BUMI income in 2004 amounted to Rp 9.811 trillion. In the year 2008, revenues approaching BUMI: U.S. $ 4 billion (nearly USD 40 trillion).

BUMI net profit in 2004 amounted to Rp 1.21 trillion. In the year 2008, net income increased dramatically BUMI to U.S. $ 654 million (approximately USD 6.5 trillion).

The intricacies of debt is U.S. $ 3.325 Billion

Success of KPC and Arutmin acquisition, BUMI is now planning a massive ekspasi. Since the period August to December 2009, BUMI giant funding reached with a total value reached U.S. $ 3.325 billion.

Here’s a list of external funding obtained BUMI:
On August 5, 2009, BUMI through Enercoal Resources Pte Ltd issued convertible bonds worth U.S. $ 375 million. This convertible bond 5-year term with a fixed interest coupon of 9.25%. BUMI provide cash settlement options on this convertible bond maturity in 2014.
In September 2009, BUMI through the BUMI Netherlands BV won the giant loan from China Investment Corporation (CIC) worth U.S. $ 1.9 billion. This loan is divided into 3 structures of the first loan of U.S. $ 600 million 4-year term, the second loan of U.S. $ 600 million 5-year term and the third loan of U.S. $ 700 million 6-year term. Three berkupon loan interest rate of 12% a year with the addition of the Internal Rate of Return (IRR) of 7% during each of these loans fall due.
On November 13, 2009, BUMI conventional issue bonds worth U.S. $ 300 million. 7th term bonds this year to give a coupon interest rate of 12% per year.
On November 25, 2009, BUMI through Enercoal, once again issued convertible bonds worth U.S. $ 300 million. This convertible bond tenor 7 years with a coupon rate of 5%.
BUMI also obtained a loan facility worth U.S. $ 300 million from Credit Suisse.
Latest, BUMI short-term loans reached 6 months of JP Morgan worth U.S. $ 150 million on December 7, 2009.

Details of the use of these funds as follows:
Investments and acquisitions worth U.S. $ 1.419 billion.
Refinancing debt (refinancing) worth U.S. $ 1.3 billion.
Capital expenditure (capital expenditure / capex) worth U.S. $ 314 million.
Equity swap worth U.S. $ 240 million.
Cap called option on convertible bonds worth U.S. $ 52 million.

According to Dileep, BUMI could not do refinancing of its debts worth U.S. $ 1.3 billion because the company still has internal cash of U.S. $ 1 billion.

“We have a loan of U.S. $ 1,2-1,3 billion which will mature in 2009, 2010 and 2011. Our internal cash sufficient to pay it off, there are currently around U.S. $ 1 billion,” he said.

BUMI Organic Expansion Scheme

Dileep said that, if the company does not reach a new financing with longer maturity than the loans that will mature in 2009-2011, then the internal cash is not available for project development.

“With this new funding, which the new payment will begin in 2013, we have the flexibility to use our internal cash. The funds will be used for project development Herald, Gorontalo, Citra Palu, Mauritania, Fajar Bumi Sakti (FBS) and Pendopo, “Dileep said.

Following the project development scheme:

Herald Resources Ltd (lead and zinc) amounted to U.S. $ 211 million. Schedule operations in 2011. Projected increase in EBITDA of U.S. $ 150 million per year.

Gorontalo (gold) and Citra Palu (copper) of U.S. $ 500 million. Schedule operations in 2013. Projected increase in EBITDA of U.S. $ 900 million per year.

Mauritania (iron ore) is U.S. $ 300 million. The operation is scheduled in 2013. Projected increase in EBITDA of U.S. $ 250 million per year.

FBS and Pendopo (coal) amounted to U.S. $ 150 million. Schedule operations in 2011-2013. Projected increase in EBITDA of U.S. $ 100 million per year.

4 Total investment in these projects reached U.S. $ 1.161 billion to be financed from internal cash BUMI who has freely for use after the refinancing of debt maturing 2009-2011.

In addition, the BUMI is also targeting coal production of KPC and Arutmin 111 million tons in 2012. For that, two golden child of this BUMI will capex budget of U.S. $ 1.1 billion.

“KPC and Arutmin fund the production capacity of their own internal cash. So do not come from cash BUMI. Through increased capacity to 111 million tons in 2012, EBITDA will rise to U.S. $ 800 million per year,” said Dileep.

Thus, the total investment value BUMI KPC and Arutmin and reached U.S. $ 2.261 billion. However, EBITDA increased projection of all this development reached U.S. $ 2.2 billion per year, worth the money to be disbursed.

4 Because the project development using internal cash BUMI and the KPC and Arutmin capex from internal cash itself, then the BUMI is still a fund acquisitions and investment of U.S. $ 1.419 billion.

“As much as U.S. $ 500 million used for repayment immediately Fajar Bumi Sakti acquisition, Pendopo and Darma Henwa,” said Dileep.

Dileep Although not mentioned in detail, but after deducting U.S. $ 500 million is, roughly BUMI still has a fresh funds for investment and acquisitions of U.S. $ 919 million.

Newmont Acquisitions

The next expansion scheme is the acquisition of Newmont. Dileep spoke up about this.

“Most of the remaining funds will be disbursed to the PT Multi Region Compete (MDB) in the form of loans to acquire 24% stake in Newmont,” said Dileep.

MDB is a joint venture between PT Multicapital (75%) and the regional government of West Nusa Tenggara (25%) in the acquisition of 24% stake in PT Newmont Nusa Tenggara. Multicapital an BUMI subsidiary indirectly by ownership of 99%.

Total funds to be spent for the acquisition of MDB 24% stake in Newmont reached U.S. $ 884 million.

BUMI has disbursed loans amounting to U.S. $ 391 million to the MDB for the acquisition of Newmont’s 10% stake. In late December 2009, BUMI will return to lend U.S. $ 493 million to acquire 14% stake in Newmont rest.

About profits to be earned through the acquisition BUMI indirect 24% stake in Newmont has not yet been estimated. However, current projections, Newmont estimated net profit would more than U.S. $ 600 million in 2009.

“I can not say how the revenue will be obtained from Newmont in the future. But you calculate yourself based on Newmont’s profit projections for the portion of our ownership of Newmont,” he said.

Wishing all acquisition funds Newmont’s 24% stake for U.S. $ 884 million has been disbursed, the funds remaining roughly there are around U.S. $ 35 million.

Berau & BHP Billiton

BUMI expansion scheme does not stop until Newmont. BUMI is currently designing the expansion to the coal marketing sector. One of the first target is the follow-up to market the coal produced by PT Berau Coal recently acquired by Recapital Advisors.

“We will start investing in the marketing of coal. The purpose for forming the bargaining position of the formation of coal price in the market. Discussion are underway with Recapital,” he said.

Dileep also revealed the company’s follow-up to offer to the planned divestment of Coking coal mines. Unfortunately he did not mention his name.

But almost certainly, mining concessions referred Coking Coal is owned by BHP Billiton Maruwai located in East Kalimantan. Dileep is also not able to mention the funds perseroann prepared for this purpose.

“If necessary, we may seek funding again in the market,” he said.

Issuance of New Shares

Later the news was widely said that BUMI is planning for the issuance of new shares linked mengkait CIC would be a buyer standby (standby buyer) with the goal to shareholders BUMI.

Dileep spoke up about this. According to him, the issuance of new shares is one option under study company. About the CIC as a standby buyer, Dileep is also not able to provide certainty.

“According to regulations, it is possible to open a company issuing new shares to obtain funding. It’s one of the options we also examined if necessary. But what kind of mechanism, not yet finalized,” he said.

Thus the scheme would be all-debt expansion and the BUMI: it invites controversy. Though many doubted the potential for success, but admitted BUMI optimistic if all this works, then starting in 2013, BUMI will record a stunning financial performance.

“Our projections, starting in 2013 revenues will double from what was achieved in 2008,” he said.

Coupon Bonds PT Sinar Mitra worth it (SMS) 2009 in Finance I have fixed interest rates ranging from 11,1-13,75 percent.

This was revealed by Deputy Director Sugianto Redjeki in due diligence meetings and public expose, the Shangri-La Hotel, Jakarta, Thursday (10/12/2009).

Bonds worth Rp200 billion will be divided into three series with a period of 370 each day, two years, and three years. Where to Series A 370-day term kuponnya is 11,1-12,1 percent.

As for series B-term is two years 12,5-13,5 per cent, and the series C is a three-year kuponnya of 12,75-13,75 percent. These bond funds will be used entirely for the credit financing of motor vehicle ownership.

Initial offering period (bookbuilding) will be held from 10-17 December 2009. The statement is expected to obtain effective on December 22, 2009. Plans offering period was held on December 26, 2009 to January 5, 2010.

Allotment date is scheduled on January 6, 2010, the date of distribution on January 8, 2010, and listing in Indonesia Stock Exchange (BEI) on January 11, 2010.

For information, these bonds have ratings of BBB + Fitch Ratings Indonesia PT. Acting as the underwriter is PT Andalan Artha Advisindo Securities and PT Pacific Capital.

The forced sale or action which is better known by the term forced sell, often blamed as one factor that led to the crisis in the stock market. In fact, a forced sell-owned rights-related securities of margin facilities in Indonesia Stock Exchange (BEI).

Well, in this opportunity detikFinance will try to give an idea of what is called a forced sell.

For some investors, especially for the layman, the term may be forced associated with all the scary specter of investment in capital markets. Many who do not understand, even pointing nonsense about this facility.

Almost every occurrence of a sharp correction in the Composite Stock Price Index (JCI) which occurred within a short time after opening at 09.30 JATS, was forced to sell gossip as if it is a taboo act to be done.

Call it, falling quickly to JCI collapse 119.297 points (5.09%) to the level of trading Thursday 2235.387 (29/10/2009). Thin transaction value is inversely related to the sharp decline in the discourse surrounding the JCI makes forced sell back into the warm conversation.

According to the Managing Director of PT Mandiri Securities Wirjoatmodjo Kartika, when it was forced action by the crowded sell securities and causing a lot of JCI dropped sharply. But this does not mean the action is the wrong action.

“It was a lot done during the forced sell it. Naturally, after days of JCI fall, forced to sell securities for their clients shares that can not top up (plus insurance),” he said when contacted detikFinance, Wednesday (4 / 11 / 2009).

JCI’s are in decreasing trend during the previous two weeks. In trading Monday (19/10/2009) JCI closed at the level of 2520.924. In trading Thursday (29/10/2009), the lowest point in the level of JCI 2235.387 or 285.537 crash (11.32%).

“With the decline in a row for it, it’s natural that many customers who use margin facilities to make top up because the ratio of collateral (collateral) ratio has exceeded agreed,” he said.

So what to do with the facility forced sell margin? Thus, customers can make purchases of shares by two sources of funds, which own funds and borrowed funds.

Now, authorities are giving permission stock for stock transaction with loan funds. This facility is included in what is called a transaction margins (margin trading).

It’s just that there are some specific requirements set out relevant stock exchange authorities anywhere can be transacted with the facility where margins and customers are able to transact margin.

Beginning of each month, BEI issued a list of effects that can be transacted in a margin, is also a list of short selling stocks. Customers also must pass the criteria. For example, based on the regulations of Capital Market Supervisory Agency & Financial Institutions (Bapepam-LK), the customer must have a special account used for
margin transactions.

“So if the current mechanism, customers who want to trade margins should open a special account separate from the account for regular transactions. In these separate accounts, funds or stocks that put there automatically serves as a guarantee unttuk clients can transact margin,” said
Kartika.

Now, each of the securities have their respective criteria on the amount of funds that can be loaned to the margin clients.

“It depends on the agreement between the customer with the securities,” he said.

So the loan amount can vary. But the ideal is 1-to-1, in a sense, the customers who placed a guarantee amounting to Rp 1 billion, could trade up to USD 2 billion.

For the record, profits from securities by providing loan funds from the interest margin is imposed under the agreement.

Securities also benefits from the transaction costs (transaction fees) is bigger, because the value of customer transactions will become larger if you use the loan funds.

Then there are the so-called collateral ratio of shares (collateral ratio). These ratios were also different magnitude, depending on the agreement between the customer with the securities.

This ratio set forth in the margin agreement or loan agreement between the two. The function of this ratio stipulation is to determine the lower limit value of shares bought with borrowed funds or margin.

“This ratio serves to see how far stock prices that customers bought with margin funds may decline, according to the amount of guarantee given customer in margin accounts,” said Kartika.

Suppose that in this way, a customer bought a 1000 shares at price of Rp 1,000 per share or a total value of Rp 1,000,000. Assume that all transactions are done with borrowed funds.

Now, consider the ratio limits agreed by 30%. That is, if the stock price moves down a 30% (USD 300) to Rp 700 per share, customers who originally bought shares at a price of USD $ 1000 it would need an additional warranty (top up).

If customers who purchase shares with a specific reason can not top up, the securities have the right to do forced sell shares purchased by the customer margin funds and execute a stock or fund guarantees the insured the previous customer, if necessary.

“The purpose of doing forced sell securities are securities that do not take a loss due to falling prices bought stock with the margin facility. In this case, a securities intermediary only act as a transaction, so if this ratio exceeded limits and customers do not want to top up, the securities have full right to do forced sell, “he said.

Put simply, this is similar to the customers who obtain loans from banks. Of these customers provide collateral or guarantee to the bank.

If at any time customers can not pay the loan installments in a protracted contract touching limit delays payment, the bank has the full right to take over the assets of customers who used credit collateral.

So, forced sell rather than an action in violation of capital market mechanisms. As Kartika, is forced sell securities, if the ratio exceeded collateral and borrowers do not do top up.

Then why forced sell often considered as a factor that could worsen the situation when market conditions are in sharp decline trend.

The logic is like this, the margin facility is not only done by one customer, but at the same time thousands of customers every day. Well, if capital markets are in a trend decline in a row, then the logic would be a lot of customers who touched the ratio of collateral constraints.

Of course not all customers can top up. This situation creates the potential for a mass forced.

Why?

The reason is, securities that wants to forced sell, would seek the highest price in the market to prevent forced to sell the value does not exceed a given value of customer collateral in margin accounts so that all customer margin debt could be covered.

Ideally like that and the same mindset over there in the minds of all securities that wants to forced sell. Sure securities to sell shares that will be forced sell quickly, before it be preceded by other securities.

Now the trend of the market decline protracted, the best price for selling shares that will be forced sell it is close to market opening. Because, in a trend decline, prices are assumed to decline in the trade.

This situation which later led to soaring sales position at the opening of the massive trade. And unfortunately, the trend decline in the market, purchasing power is usually not too big.

This condition then causes the stock prices experienced rapid correction in early trading. Forced mass sell amid decreasing trend was briefly seen as a factor pushing the market collapse.

But actually it is a consequence of the existence of margin transaction facility. So it was not made unilaterally by the alias of securities violation.

“So it’s full rights are owned securities, we do everything according to the corridor anyway,” explained Kartika.

Indeed Kartika admitted, the mechanism guarantees the ratio limits or forms of other agreements related to the margin facility does not have a general reference forms provided by the authorities formal exchanges.

“So in practice, it all depends on agreement between the customer with the securities. It is sometimes difficult to make some customers, because the mechanism of margin transactions in other securities may differ from other securities,” said Kartika.

According Kartika, have compiled a reference margin transaction that formally issued by the authority of exchanges, including the mechanism forced to sell, so customers can also be easily find out the risk margin trading.

“We (securities) are asking this to KPEI (PT Indonesia Securities Clearing Guarantee Corporation). With this common reference, either customers or the securities become easier to provide margin facilities, primarily related to the forced sell,” he said

Forth season has arrived. Of course all the necessities needed cash and credit cards were certainly not small. How to manage our finances during the forth?

Hotman Simbolon Vice President, Customer Care Head, Citi Indonesia explains, communities should make a special budget in order to really know the expectations that spending will occur during the trip going home, from departure to return to the city home.

What are tips for using credit cards going home? Here are tips from Citi, which cited detikFinance, Monday (14/9/2009).

Credit Card Utilization During Mudik

To support your journey, credit cards can be used for the primary needs such as transportation, accommodation and consumption. If you use a plane and stay at the hotel, then the payment to the travel agent, airline or hotel can be done by credit card. It is now more and more tourism services offered through online, but always be careful. Use only the company’s official site has a good reputation and can be contacted for additional information.

By the time you berlebaran, there may be some transactions that you can pay by credit card. For example to eat in restaurants, shopping in stores or leisure time with relatives. Prioritize payment using credit card. Thus, you do not need to reduce the amount of cash in your hands so you will not run out of cash and no need to always go back and forth to the ATM to take money.

How to safely use credit cards

Before you travel make sure your credit card does not expire. Know the number of pending charges for the current and the amount of credit you can use during the journey, not until you can not use cards simply for forgetting to pay bills before.

To be safe, write out your credit card number, expiration date and note the phone number that can be reached from the issuer of the card and store in a safe place separate from your card. Completeness of this data is important, if at any time your card is lost, stolen or fraud occurs. However, never once time to include the PIN.

In addition, pay all your regular bills before leaving forth. Routine bills here means the cost of electricity, water, mobile phone or a monthly fee your fitness center. Thus, this bill does not interfere with your mind during the trip

If you are traveling out of town, then it should inform the card issuer so that your transactions are not suspected of fraud / irregularities in the transaction.

We’re on the way, do not leave your card in the hotel room, recreation area or on the vehicle. If necessary use a safe deposit box to put valuables.

Save evidence of your transactions, when reached at home again check whether the bill in accordance with the transaction that you do. If there is a difference or mistake, report it immediately in the period in accordance with the rules of credit card issuer.

PT Indonesia Morningstar (Pefindo) assign ratings to PT Mandiri idA Tunas Finance (TUFI). As for IV/2007 bonds worth Rp350 billion and bonds worth Rp250 billion V/2008 with a stable outlook.

This is like Pefindo management disclosed in a written statement received okezone, in Jakarta, Thursday (19/11/2009).

As Pefindo, these ratings reflect the strength of support from PT Bank Mandiri Tbk (BMRI), the magnitude of the potential for business growth through synergies with its shareholders, and strong capital levels.

However, the ratings are constrained by the weakening position of the company’s business and industry competition.