Debt Conversion: Bumi Issues Rp 35 Trillion Rights Issue

PT Bumi Resources Tbk (BUMI) plans to issue a rights issue worth Rp 35.1 trillion. This corporate issuance will be largely used to restructure the company's debt by converting it into BUMI shares.

If this corporate action is implemented, it will exceed half the value of all rights issues by Indonesian Stock Exchange (IDX) listed companies throughout 2016, which totaled Rp [trillion – the original text is missing a number here]. This will also be the second-largest rights issue after PT Bakrie & Brothers' Rp 40 trillion issuance in 2008. Several other issuers will also undertake this corporate action, such as PT Rimo International Lestari Tbk, PT Sekar Bumi Tbk, PT Red Planet Indonesia Tbk, PT Properti Tbk, and Bank Ina Perdania Tbk, with the aim of expansion, acquisitions, and capital increase.

In its January-September 2016 financial report, BUMI recorded a profit of US$ 73 million, compared to a loss of US$ 628 million in the same period the previous year. However, this profit was not from sales but rather from a reduction in debt and financial burdens, and from other income. BUMI's debt as of Q3 2016 amounted to US$ 6.2 billion, or approximately Rp 82.6 trillion, and it recorded a capital deficiency of US$ 2.85 billion.