Vallar & Bakrie - The Indonesia Today

Vallar Plc or Bumi Plc gains 1.17% Tuesday to 1,300 pence in London . The stock has gained 44% since November 2010 but on very low average trading volume. But for Credit Suisse AG, this is important, because Bakrie & Brothers together with Long Haul Holdings Ltd have just entered into a credit agreement.

As explained by BNBR in its 2010 financial statement, on March 2nd, 2011, BNBR and Long Haul Holding Ltd., entered into a credit agreement with Credit Suisse AG, Singapore Branch, as the Structuring Agent.

This loan has been used by the Company to refinance the Company’s loans from Credit Suisse International, Credit Suisse AG, Singapore Branch, Bank Sarasin – Rabo (Asia) Limited, PT Sinarmas Sekuritas and early redemption of derivative transaction with Glencore. Total facility received by the Company amounted to USD601.7 million. Interest rate of this facility is LIBOR + 6% per annum and it will become due on March 2, 2012. This facility is collateralized by all of the Vallar shares owned by the Company.

Based on a sale and purchase agreement between Bakrie entities and Vallar Plc, Bakrie swapped around 5.2 billion shares in BUMI for around 90.1 million newly issued Vallar shares, of which BNBR receives around 50.5 million Vallar shares.

On February 23, 2011, the agreement has been amended whereby BNBR will receive around 49.4 million Vallar shares by surrendering 2.847 billion BUMI shares not later than April 30, 2011. BNBR has on March 4 executed the swap agreement.

Let's trace back to 2008 financial statement. BNBR purchased from Bakrie-related entities 6.79 billion shares of BUMI in March 2008. The same year, BNBR offloaded 3.6 billion BUMI shares and booked loss of Rp14.77 trillion. The balance was 3.19 billion BUMI shares as at Dec 31, 2008.

BNBR's financial statement for 2010 recorded loss on sale of investment in shares of stock of Rp10.26 trillion. As a result, BNBR received tax benefit of Rp1.5 trillion, which will help BNBR in the future's tax payment (loss carry forward).

So, BNBR closed at Rp65 Tuesday (Apr 5). At that price, BNBR currently has market capitalization of Rp6.091 trillion. The current price is only 9.2% of its peak of around Rp700 when Bakrie Group consolidated its shareholdings in BUMI, ENRG, UNSP, BTEL into BNBR.

The idea was to make BNBR Indonesia's Berkshire . Looks like that's not the case, well, at least until now. BNBR has re-offloaded these assets through various loans-related agreements. Vallar Plc is now the new BNBR. The difference, Vallar is focused on minerals. That's why Bakrie injected Berau Coal (BRAU). The group expected a prime listing in London Stock Exchange.

Renaming Vallar into Bumi Plc is part of the makeover. Read again statements from Vallar when the share swap agreement was first announced. But as to whether this makeover will be a success, it depends on whether bankers like Credit Suisse would still be around the clock arranging deals. The bigger the deals, including a possible refinancing of CIC's US$1.9 billion facilities, the bigger will be the bonuses for bankers (including, but not limited to fees and special services!).