Loan default concerns sees Bakrie family sell partial stake in Bumi

The Bakrie Group is selling a 23.8% stake in London-listed Bumi in a $1 billion (€730 million) deal aimed at avoiding a loan default.

Coal miner PT Borneo Lumbung Energi will buy the shares, after talks between the Indonesian family business and Swiss-based Glencore, the world's largest diversified commodity trader, failed.

The sale will go someway to paying back a $1.3 billion loan the family currently owes a syndicate led by Credit Suisse.

At the time of Bumi’s initial public offering on the London Stock Exchange in April 2011, the Bakries agreed a $1.3 billion loan with Zurich-based bank Credit Suisse, which granted the lenders a share pledge in the form of a mortgage over all of the ordinary shares that the family holds in Bumi.

But after the share price fell by almost half in the months to October, lenders in the loan syndicate asked the Bakrie family to repay the loan “in the near future”, Bumi said last month.

Under the sale to Borneo, which is backed by Indonesian businessman Samin Tan, the family will divest half of its Bumi shares – it previously owned 47.6% of the business.

“The Bakrie Group intends to apply the proceeds to paying down the collateralised loan against its shareholding in Bumi considerably reducing its debt position,” a statement from Bumi said.

The Bakrie Group, a holding company, was founded in 1942 and is run by second-generation Nirwan Bakrie and his family.