ft article. asia coal deal

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Vallar pays $3bn in Asia coal deal
By Anthony Deutsch in Jakarta and Christopher Thompson in London

Published: November 16 2010 13:20 | Last updated: November 16 2010 20:44

Vallar, the cash shell founded by financier Nat Rothschild, is paying $3bn to create a mining company that will see Indonesias powerful Bakrie family debut with a London listing for their interests.

A new company bundling together the assets of two Indonesian groups and the shares of Vallar will be listed in London as Bumi Plc. Shares in Vallar, which raised 700m ($1.1bn) in a public flotation in July, will be suspended.

The name Vallar will cease to exist, but I will be a large shareholder, Mr Rothschild said. This is a platform to grow in Indonesia and outside.

The new company, which will be the largest foreign supplier of thermal coal to China, is paying $1.58bn for 75 per cent of Berau Coal Energy, the fifth-largest producer in Indonesia, comprising $739m in cash and 52.3m shares priced at 10 each. A total of 90m Vallar shares valued at 10 each will be issued in exchange for 25 per cent of Bumi Resources, the crown jewel of the Bakrie Group.

Bakrie Holding Company, the countrys largest coal mining group, will receive 62.7m new ordinary shares and 27.4m preferential shares, equal to a 43 per cent stake in Bumi Plc.

After the deal, which is expected to close in April, the Rothschild family will own 34 per cent of the new Bumi company. Berau Coal, owned by the Indonesian private equity tycoon Roslan Roslani, will own the remaining 23 per cent of the enlarged capital.

Both assets come with considerable debt. Bumi Resources has $3.6bn in net debt and Berau has $800m in net debt, says Vallar.

Bumi [Resources] is the number one coal company in Indonesia and its a relatively highly leveraged company, so on its own it [Bumi Resources] was unable to buy [a stake in] Berau, said Mr Rothschild, who called the deal a once-in-a-lifetime opportunity.

Bumi Resources, which also owns copper and gold assets in Indonesia as well as iron ore and diamond assets in west Africa, is one of the most actively traded stocks on the Indonesian stock exchange. It has seen its shares fall sharply this year, partly because of concern about its high debt. The Bakrie familys seven listed companies are also active in oil and gas, telecommunications, palm oil, infrastructure and real estate.

Vallar said the deal would give it exposure to the booming Indonesian and pan-Asian energy market, with a joint Indonesian production of 78m tonnes of coal in 2010. Berau and Bumi have been profitable during the past 12 months, with earnings before interest, taxes, depreciation and amortisation of $350m and $1.43bn respectively.

Mr Rothschild will be co-chairman. Ari Hudaya, president director of Bumi, is to be chief executive.
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