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UPDATE 1-Indonesia's Bumi averts financial squeeze as $425 mln in loans extended
10/01/2013 Email this story  |  Printable Version

* Two loan facilities extended for three more months -Bumi

* Hedge fund manager Noonday, Credit Suisse among lenders -sources

* Bumi in talks with sovereign fund CIC to convert debt into equity -sources

By Janeman Latul

JAKARTA, Oct 1 (Reuters) - A unit of Indonesia's biggest miner, PT Bumi Resources, has extended $425 million worth of maturing loans for three more months, the company said, averting an immediate financial squeeze as it struggles with a growing pile of debt.

It was another last minute debt extension by the coal mining group, controlled by the politically-connected Bakrie family, after Bumi Resources refinanced a maturing $150 million debt in August at a high cost.

PT Bumi Resources Minerals, a unit of PT Bumi Resources, extended two loan facilities -- $100 million and $325 million -- from Credit Suisse due this month to December 2013, the company said in a statement.

The loans arranged by Credit Suisse involved creditors such as U.S. hedge fund manager Farallon Capital Management's Noonday unit and the Swiss bank itself, sources with direct knowledge of the matter said.

The extension comes after Moody's Investors Service downgraded the corporate family and senior secured bond ratings of PT Bumi Resources in late July to Caa1 from B3.

Bumi faces the financial pressure of a much weaker commodities market, slowing economic conditions in China and on top of that huge liquidity constraints as a result of debt maturities, Philipp Lotter, Singapore-based managing director of corporate finance at Moody's, told Reuters last month.

The company did not disclose the interest rate on the loans.

But sources said the $100 million loan was originally an 18-month facility and had an interest rate of LIBOR plus 6 percent, while the $325 million loan was an over 2-year facility with an interest rate of LIBOR plus 7 percent. LIBOR is the London Interbank Offered Rate.

Bumi Resources took an expensive $1.9-billion loan in 2009 from sovereign wealth fund China Investment Corp and has been trying since then to swap the debt into equity at one of its units.

"They are discussing a debt-to-equity swap with CIC," said one source, adding that the extension was agreed because lenders were comfortable with the collateral backing the loans.

Bumi Resources Minerals is the group's metals unit.

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