Bumi Jumps 20% whilst Miner Pulls Out of Bid Group

Shares in top Indonesian coal miner PT Bumi Resources jumped 20% on Tuesday, clawing back some recent heavy losses, as selling pressure subsided and investors waited to see if the planned sale of a large stake in the firm would go through.

Bumi's shares ended at 850 rupiah (Rp), up 19.7%, but have still lost two-thirds of their value since a trading suspension was lifted on 6 November as investors lost confidence in the stock.

Authorities had suspended trading in Bumi for around a month on worries about the financial health of its main shareholder, Bakrie & Brothers, which has been struggling to repay more than $1bn in debt.

The plunge in Bumi's share price, which may have been accelerated by margin calls, has prompted speculation that private equity firm Northstar Pacific could either back out of its recent deal to buy 35% of Bumi for $1.3bn or try to renegotiate a lower price.

Smaller Indonesian state coal miner PT Tambang Batubara Bukit Asam, which had been part of the consortium, said late on Tuesday it was pulling out of the group, a move it had flagged earlier.

"The situation now is not favourable. (Bumi) shares have kept falling, before starting to rise today," Bukit Asam's president director Sukrisno said.

"Moreover, it's difficult to seek financing under the current situation," he said referring to tight liquidity in global markets.

One trader at a local brokerage house attributed Tuesday's gains in the stock to a rebound in regional share markets following the US government's rescue of struggling Citigroup, and to a slight improvement in coal prices.

John Teja, head of equities sales at Ciptadana Securities, agreed that selling pressure appeared to have subsided for now.

"In the short term, I see a possibility that the shares might go up to Rp1,200."

Bumi is the crown jewel of the business group owned by the family of Indonesia's chief social welfare minister Aburizal Bakrie, whose interests stretch from property to palm oil.

The group, with interests ranging from palm oil to property, borrowed heavily using Bumi shares as collateral, forcing it to look for a sale of its 35% stake when the shares fell as the commodities' bubble deflated.

The group announced in early November it would sell the stake to Northstar Pacific, but details remain sketchy.

Philippine conglomerate San Miguel Corp has said it plans a rival bid for 51% of Bumi, but has not said how much it would offer.

Bumi, which also announced plans to spend more than $700m on a share buyback, was briefly the biggest firm by market capitalisation on the Indonesian bourse when its share price peaked in June.

Shares of Bakrie Brothers fell 9% on Tuesday, underperforming a 1% gain in the broader Indonesian market.

By Harry Suhartono and Fitri Wulandari, Reuters.