Indonesia's Bakrie & Brothers Offers Convertible Bonds to Creditors
One of Indonesia's long standing companies - and also one of the most controversial ones in Indonesia - Bakrie & Brothers plans to offer part of its shares to creditors Mitsubishi Corporation, Glencore International, and Eurofa Capital Investment in a debt for equity swap. This plan is part of the company's efforts to restructure USD $453 million worth of debt through mandatory convertible bonds. Indra Ginting, Chief Investor Relation Officer at Bakrie & Brothers, confirmed the company owes Mitsubishi USD $150 million, Glencore USD $200 million, and Eurofa Capital USD $103 million.
Ginting added that the company is still to calculate the number of shares that will be swapped in these deals. However, the number will most likely exceed the amount of shares that were offered to five other creditors last week. Last week, Bakrie & Brothers issued IDR 990.7 billion (approx. USD $74 million) worth of mandatory convertible bonds to restructure its debt obligations to Daley Capital (IDR 430.4 billion), Interventures Capital Ltd (IDR 373.8 billion), Smart Treasure Ltd (IDR 90.8 billion), Harus Capital Ltd (USD $6 million), and Maybank Kim Eng Securities (IDR 14.7 billion). This involves a total of 19.8 billion shares (17.45 percent of Bakrie & Brothers paid up capital) at IDR 50 a piece. Creditors can convert the bonds into shares in the next five years (every 15 June or 15 December of the year).
This corporate action lowers Bakrie & Brothers' debt position and liabilities. In March 2016, the company's negative net working capital reached IDR 9.0 trillion (approx. USD $667 million) as liabilities exceed its assets. A negative working capital - for an extended period - typically indicates that a company struggles to make ends meet and has to rely on borrowing or stock issuances to finance the working capital. Ginting said the company's negative working capital is expected to ease to IDR 2.8 trillion after the mandatory convertible bond was issued last week. In case the three creditors - Mitsubishi Corporation, Glencore International, and Eurofa Capital Investment - will accept the new mandatory convertible bonds, then working capital may turn positive.
Stock Quote Bakrie & Brothers - BNBR:
Bakrie & Brothers Financial Highlights:
| 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | |
| Net Revenues | 7,632 | 19,288 | 16,695 | 15,479 | 5,213 | 6,379 | 4,662 |
| Gross Profit (loss) |
3,705 | (485) | 5,087 | 2,503 | 1,163 | 1,404 | 626 |
| Net Profit (loss) |
(1,735) | (6,998) | 132 | 355 | (12,723) | 152 | (1,719) |
| EBITDA (loss) |
1,878 | (7,276) | 3,222 | 2,038 | 562 | 665 | 32 |
| Total Assets | 26,388 | 31,768 | 25,213 | 15,658 | 11,878 | 11,314 | 9,186 |
| Total Liabilities | 18,212 | 18,121 | 13,046 | 10,198 | 13,972 | 13,500 | 13,122 |
| Net Profit per Share¹ |
(18,51) | (81,53) | 4,82 | 1,36 | (135,78) | 1,65 | (18,62) |
in billion IDR rupiah, except otherwise indicated
¹ in IDR rupiah
Source: Bakrie & Brothers, Annual Report 2015