Indonesia’s politically powerful Bakrie group, whose $1.2bn debt troubles froze Jakarta’s stock market for a week in October, appears to have escaped disaster after announcing deals that halve its liabilities while surrendering only a small portion of crown jewel Bumi Resources, the region’s biggest coal producer.
Bakrie & Brothers, the holding company of the family of chief welfare minister Aburizal Bakrie, said in a statement on Thursday that it had finalised an agreement with Northstar Pacific, a local private equity group, taking over debts of $575m.
The two parties will form a joint venture holding 21.4 per cent of Bumi, in which Bakrie & Brothers will have 70 per cent and Northstar 30 per cent.
The previous day, it had disclosed that Brentwood Ventures, a hedge fund, had taken over $150m of debt owed to ICICI in return for a stake of 6.7 per cent of Bumi.
Analysts remained sceptical, however, about the nature of the deals, particularly in terms of the implications for minority shareholders, considering the lack of detail given in the announcements.
Neither executives from Bakrie & Brothers nor Patrick Waluyo, the head of Northstar, were willing to provide clarification on Friday.
The Bakries’ woes were triggered when emerging markets crashed in September and shares that the group had used to guarantee $1.2bn of loans lost more than three-quarters of their value and so no longer provided sufficient cover.
The panic prompted Indonesian market authorities to close all share trading for several days.
Before the crisis, Bakrie & Brothers held 35 per cent of Bumi, whose market capitalisation peaked at $18.5bn in June before crashing to $1.1bn in October. It is now worth $1.6bn.
In its Christmas Day statement, the company said it now holds only the Bumi shares in the joint venture but that leaves about 2 percentage points of its stake unaccounted for when its other deals are added up.
It also has voting rights over the 4.2 per cent of Bumi it sold to Ancora Capital, a local private equity fund, in exchange for the latter taking over $72m of its debt.
Bakrie & Brothers’ other holdings have also remained largely intact, except for its stake in property company Bakrieland Development, which has dropped from 40 per cent to 14.8 per cent.
Bumi’s share price rose 1 per cent on Friday on news of the deals while Bakrie & Brothers’ remained unchanged at the minimum low of Rp50.