how to unload the debt burdens

PT Borneo Lumbung Energi & Metal

On the Road to Recovery by Sando Sasako

Jakarta, 2016-08-10 20:36:44

Get the pdf file on http://bit.ly/2bU9DiP For inquiries, please call +62 851 0518 7118 or +62 21 4027 8375

For inquiries, please call +62 851 0518 7118 or +62 21 4027 8375

How to unload the debt burdens? 1. Fix the financial structure. 2. Fix the capital structure.

What makes them different? Every components on the right side of the balance sheet compared to the total assets are describing one’s financial structure. The capital structure is financial structure without current liabilities.

Get the pdf file on http://bit.ly/2bU9DiP


Strengthen your capital structure. a. Refinance the loans. b. Restructure the debts.

c. Deepen the capital structure and lower the financial structure.

1) Reinstate the status/label of mostly the current liabilities components to long-

term liabilities, as possible.

2) Reschedule, lower the pressures on short-term liabilities, either in terms of principals, interests, due time.

3) Deferred payments to any liabilities. Similar names may include moratorium, allowed by the court order, such as PKPU, bankruptcy clause, Chapter 11.

4) To have some slacks, freeze the debts and/or request some cuts.

5) Convert the liabilities to equity.



How to unload the debt burdens? 3. Let the parent companies and/or the subsidiaries also take the heat and

share some burdens, mostly in regards to related parties transactions.

4. Sell the (bad) loans as distressed securities, and put some security to the new loan repayments (ABS), such as trade claims, the most underlying assets and/or its financial performance (indicators) such as + cashflows, liquidity, etc.

5. Secure the most wanted financial performance of the underlying assets: a. Revenue / income generation. b. Capital appreciation.

6. Bargain investors are willing to take the risks for the rosy and cheesy outcomes, that came out as the throughput of the fundamental earnings power of the underlying

assets; which can be achieved by the investors only, and if only, the investors are taking parts

and roles, actively, in both revenue/income generation and capital appreciation.



Internally speaking, financially troubled companies are required to do only 2 things, that is: 1. Securing the money making mechanisms and systems, either in

minimum revenue generation that can cover and

2. Maintain the status as the least producing costs (efficient state), or remain and able to be operational effectively and unfettered.

Securing the money making mechanisms includes to have 1. a guaranteed demand and 2. sustained purchase orders from the most prospective and viable trade leads and customers such as steel factories and/or metallurgical companies operating the blast furnace (smelting purpose).



Externally speaking, the bargain investors’ characteristics that we oughtta seek are: 1. Love to take a role to play long and along.

2. Positive thinking and attitude towards the right passage of the financially

troubled companies to restructure and reorganise the business successfully.

3. Not assuming the dire straits that the lay investors believe, perceive, and conceive.

4. Having the needed and required experiences, skills, and capabilities to get involved in the refinancing process and legal reviews, a far more time-demanding investments, a lot of analytical works.

5. Not limited to improvement in operations, but most of all, increasing the value of its securities from the distressed status to investment grade, either in the end or in the middle of the process.


Serabdi Sakti

Jakarta, August 2016

PT Borneo Lumbung Energi & Metal Tbk

On the Road to Recovery

by :

Sando Sasako

Perpustakaan Nasional RI: Data Katalog dalam Terbitan (KDT)

Sando Sasako.

PT Borneo Lumbung Energi & Metal Tbk: On the Road to

Recovery / by Sando Sasako. Jakarta : CV Serabdi Sakti, 2016.

x + 95 pp. ; 21 cm

ISBN 978-602-73508-7-…

1. …. I. Judul.

Published by CV Serabdi Sakti

Graha Anggrek

Jl. Anggrek Rosliana VII No.63

Jakarta Barat 11480, Indonesia

Tel. +62 21 4027 8375 (Fren)

+62 851 0518 7118

Copyright © Sando Sasako

All rights reserved.

You may not reproduce the content of this book, in part

or in whole in any form with or without the written

permission of the copyright owner and publisher, as long

as you cite this reference as your ultimate one.

Keywords:

PT Borneo Lumbung Energi & Metal Tbk: On the Road to Recovery – iii

Foreword

In less than 2 months before Linc Energy Ltd filed for voluntary administration on 30 March 2016,

Linc Energy had signed an MOU with at least 2 Indonesian companies regarding the UCG projects

in Indonesia, that is 18 February 2016. However, on 23 May 2016, Linc Energy just had confirmed

its status as a liquidating company, but not its US subsidiaries as they had filed for relief and seek

bankruptcy protection (Chapter 11) on 29 May 2016.

The MOUs were the one of many heydays that UCG projects have been accepted worldwide as an

alternative to mine the primary energy coal in terms of syngas. Scotland, Australia, Vancouver, and

Nova Scotia were the few names that had been offering and approving coal companies to try and

implement the UCG technologies.

As coal companies can never be aware of what beneath the earth surface, they failed to convince

that they already have the required technologies and resources to protect the environment. They are

doomed to fail before it’s begun.

As a consequences, lenders and creditors participating as investors in the proposed UCG projects

surely stop funding and began to demand a payback. Even worst, they wanted to liquidate their

assets invested in the troubled coal companies.

Some companies may weather the storm and sail unscathedly. Some others may have to sink and

scuttle their ships to the bottom of ocean floor. Nevertheless, what may have saved the ships from

sinking is the captain and skipper of the ship. Should the captain know exactly the weights and

worth of the ship, the cargoes, and the crews, they shall bargain to salvage what’s worth saving.

Indeed, in the beginning, it hurts. A lot. To many parties. Corporate retrenchment, layoffs, shrinking

assets are some desperate measures to be taken in desperate times. These inevitable corporate

actions are unload some burdens in preserving cashflows and contain cash drains. Some assets are

indeed liabilities. Especially when the assets are failing to perform and generate revenues that

profitable enough to cover the incurred and embedded expenses.

Jakarta, 31 August 2016

Sando Sasako

Email: sandosako @ yahoo.com

Mobile: +62 812 8056 516

PT Borneo Lumbung Energi & Metal Tbk: On the Road to Recovery – v

Contents

Foreword ....................................................................................................................................... iii

Contents .......................................................................................................................................... v

List of Tables .................................................................................................................................ix List of Figures ................................................................................................................................. x

Global Trends in Energy Industry .................................................................................................... 1

Global Coal Trends.......................................................................................................................... 2

Energy Business in Indonesia in a brief ........................................................................................... 3

Coal ............................................................................................................................................. 5

Borneo Lumbung Energi & Metal ...................................................................................... 11 Has Samin Tan lost his bets in Bumi plc and BORN? ..................................................... 11

The Company Named Borneo Lumbung Energi ............................................................. 12 The Road to Highly Indebted BORN .............................................................................. 14

The Awkward and Ugliness in 2011 ............................................................................... 17 The Teasing Dreams and Illusion of Interest in Bumi plc ............................................... 21

The $1b Debt Traps for Lending Stanchart and Borrowing BORN ................................. 23 The End of Bumi plc ...................................................................................................... 25

Tony Blair ...................................................................................................................... 26 REDD+ .......................................................................................................................... 27

Heart of Borneo ............................................................................................................. 28 Samin Tan ...................................................................................................................... 29

Recapital Advisors ......................................................................................................... 30 Borneo Lumbung Energi and Energi Megah Persada ...................................................... 31

Borneo Lumbung Energi & Metal: The Brief Profile .......................................................... 33

Shareholders .................................................................................................................. 33 Management .................................................................................................................. 34

Related Parties and Financial Transactions ..................................................................... 35 Third Parties & Transaction Types ................................................................................. 37

IPO Proceeds ................................................................................................................. 39 Financials ....................................................................................................................... 40

Surviving on Debt Burdens, Theoretically ...................................................................... 40 The Walk-Through ......................................................................................................... 43

The Road So Far ............................................................................................................ 44 Troubles with the Crown Jewel Holding the Bargain Chip ............................................. 45

Asmin Koalindo Tuhup ...................................................................................................... 48

AKT in Brief, Legally .................................................................................................... 50 Concession Area ............................................................................................................ 51

Coal Deposits ................................................................................................................. 52 Mining Operations ......................................................................................................... 53

Production ...................................................................................................................... 54 Product Specifications .................................................................................................... 55

Coal 101 ........................................................................................................................ 55 Coking Coal Grades ....................................................................................................... 56

vi – PT Borneo Lumbung Energi & Metal Tbk: On the Road to Recovery

Infrastructure .................................................................................................................. 57

Transportation ................................................................................................................ 58 Marketing & Sales ......................................................................................................... 60

Customers ...................................................................................................................... 60 Management .................................................................................................................. 61

Shareholders .................................................................................................................. 61 Financials ....................................................................................................................... 61

References ..................................................................................................................................... 63

Directory of Coal Mining Companies in Indonesia ........................................................................ 67

Abadi Batubara Cemerlang .................................................................................................... 67 Abadi Coal Cemerlang ........................................................................................................... 67

Aceh Resources and Mineral .................................................................................................. 67 Aceh Resources and Mineral Core ......................................................................................... 67

Adaro Indonesia ..................................................................................................................... 67 Adimas Baturaja Cemerlang .................................................................................................. 67

Allied Indo Coal , PT ............................................................................................................. 68 Andhika Mutiara Etam ........................................................................................................... 68

Andhika Mutiara Lestari ........................................................................................................ 68 Andhika Mutiara Sejahtera ..................................................................................................... 68

Antang Gunung Meratus ........................................................................................................ 68 Anugerah Jatimulia ................................................................................................................ 69

Anugerah Jatimulya ............................................................................................................... 69 Arutmin Indonesia ................................................................................................................. 69

Asmin Bara Bronang.............................................................................................................. 69 Asmin Bara Jaan .................................................................................................................... 69

Asmin Koalindo Tuhup .......................................................................................................... 69 Astaka Dodol ......................................................................................................................... 70

Bahari Cakrawala Sebuku ...................................................................................................... 70 Bangun Banua Persada Kalimantan ........................................................................................ 70

Bara Mutiara Prima ................................................................................................................ 70 Bara Pramulya Abadi ............................................................................................................. 71

Bara Sentosa Lestari .............................................................................................................. 71 Bara Utama Unggul ............................................................................................................... 71

Baradinamika Mudasukses ..................................................................................................... 71 Baramarta, PD ....................................................................................................................... 71

Baramarta .............................................................................................................................. 71 Baramulti Sukses Sarana ........................................................................................................ 72

Baramulti Suksessartana ........................................................................................................ 72 Baramutiara Prima ................................................................................................................. 72

Barasentosa Lestari ................................................................................................................ 72 Batu Alam Selaras ................................................................................................................. 72

Batubara Duaribu Abadi, PT .................................................................................................. 72 Batubara Selaras Sapta, PT .................................................................................................... 72

Baturona Adimulya ................................................................................................................ 73 Benakat Energi ...................................................................................................................... 73

Benakat Energy...................................................................................................................... 73 Bentala Coal Mining .............................................................................................................. 73

Berau Coal ............................................................................................................................. 73 Bharinto Ekatama .................................................................................................................. 73

Bima Duta Batubara Sakti ...................................................................................................... 74

PT Borneo Lumbung Energi & Metal Tbk: On the Road to Recovery – vii

Borneo Bhaktibara Utama ...................................................................................................... 74

Borneo Indobara .................................................................................................................... 74 Buana Bara Utama ................................................................................................................. 74

Bukit Baiduri Enterprises ....................................................................................................... 74 Bukit Sunur ........................................................................................................................... 75

Bumi Laksana Perkasa ........................................................................................................... 75 Bumi Panen Sukses ................................................................................................................ 75

Bumi Sukse Mandiri .............................................................................................................. 75 Buntok Perdana Coal Mining ................................................................................................. 75

Calicari .................................................................................................................................. 75 Coal Duaribu Abadi ............................................................................................................... 75

Coal Selaras Sapta ................................................................................................................. 76 Danau Mas Hitam .................................................................................................................. 76

Daya Lapan ........................................................................................................................... 76 Delma Mining Corporation .................................................................................................... 76

Dhamar Tejokencono ............................................................................................................. 76 Dharma Puspita Mining ......................................................................................................... 76

Dutaputra Tanaratama ............................................................................................................ 77 Ekasatya Yanatama ................................................................................................................ 77

Energi Batubara Sumatera ...................................................................................................... 77 Energy Batubara Sumatra ...................................................................................................... 77

Fajar Bumi Sakti .................................................................................................................... 77 Firman Ketaun Perkasa .......................................................................................................... 77

Galicari .................................................................................................................................. 77 General Sakti Kreasindo ........................................................................................................ 78

Generalindo Prima Coal ......................................................................................................... 78 Gunung Bayan Pratama ......................................................................................................... 78

Gunung Bayan Pratama Coal ................................................................................................. 78 Hulubalang Inti Bumi ............................................................................................................ 78

Indexim Coalindo .................................................................................................................. 78 Indominco Mandiri ................................................................................................................ 79

Insani Bara Perkasa ................................................................................................................ 79 Interex Sacra Raya ................................................................................................................. 79

Intitirta Prima Sakti ................................................................................................................ 79 Intitirta Primasakti ................................................................................................................. 80

Jorong Barutama Greston ....................................................................................................... 80 Juloi Coal .............................................................................................................................. 80

Kadya Caraka Mulia .............................................................................................................. 80 Kalimantan Energi Lestari ..................................................................................................... 80

Kalteng Coal .......................................................................................................................... 81 Kaltim Prima Coal ................................................................................................................. 81

Kartika Selabumi Mining ....................................................................................................... 81 Karunia Poladaya Bumi ......................................................................................................... 81

Karya Bumi Baratama............................................................................................................ 81 Kendilo Coal Indonesia .......................................................................................................... 82

BHP Kendilo Coal Indonesia ................................................................................................. 82 Kideco Jaya Agung ................................................................................................................ 82

Kitadin ................................................................................................................................... 82 Kodeco Horna Mandiri .......................................................................................................... 82

Kurnia Sarana Lestari ............................................................................................................ 82 Kutai Kertanegara Prima Coal ............................................................................................... 82

Lahai Coal ............................................................................................................................. 83

viii – PT Borneo Lumbung Energi & Metal Tbk: On the Road to Recovery

Lanna Harita Indonesia .......................................................................................................... 83

Lianganggang Cemerlang ...................................................................................................... 83 Mahakam Sumber Jaya .......................................................................................................... 83

Mandiri Intiperkasa ................................................................................................................ 83 Mantimin Coal Mining........................................................................................................... 84

Marunda Graha Mineral ......................................................................................................... 84 Marunda Grahamineral .......................................................................................................... 84

Maruwai Coal ........................................................................................................................ 84 Maruai Coal ........................................................................................................................... 84

Meulaboh Energitama ............................................................................................................ 84 Meullaboho Energitama ......................................................................................................... 85

Mitrajaya Timuragung ........................................................................................................... 85 Multi Harapan Utama ............................................................................................................ 85

Multi Tambangjaya Utama ..................................................................................................... 85 Nusa Minera Utama ............................................................................................................... 85

Nusantara Termal Coal (D/A Nusantara Thai Coal) ............................................................... 86 Nusantara Thai Coal .............................................................................................................. 86

Pari Coal ................................................................................................................................ 86 Pendopo Energi Coal ............................................................................................................. 86

Pendopo Energy Batubara ...................................................................................................... 86 Perkasa Inakakerta ................................................................................................................. 86

Persada Permata Mulya .......................................................................................................... 87 Persada Permata Mulia........................................................................................................... 87

Pesona Khatulistiwa Nusantara .............................................................................................. 87 Pinang Jaya Sarana Bara ........................................................................................................ 87

Pinangjaya Sarana Bara ......................................................................................................... 87 Ramdany Coal Mining ........................................................................................................... 87

Ratah Coal ............................................................................................................................. 87 Restubara Karya Pratama ....................................................................................................... 88

Riau Bara Harum ................................................................................................................... 88 Salamindo Coalindo ............................................................................................................... 88

Salamindo Pahala................................................................................................................... 88 Santan Coal............................................................................................................................ 88

Santan Batubara ..................................................................................................................... 88 Sarwa Sembada Karya Bumi .................................................................................................. 88

Selatan Selabara ..................................................................................................................... 89 Selo Argodedali ..................................................................................................................... 89

Selo Argokencono Sakti ......................................................................................................... 89 Senamas Energindo Mulya ..................................................................................................... 89

Senamas Energindo Mulia ..................................................................................................... 89 Sinar Benua Prima ................................................................................................................. 90

Sinarindo Barakarya............................................................................................................... 90 Singlurus Pratama .................................................................................................................. 90

Solok Bara Adipratama .......................................................................................................... 90 Sumber Barito Coal ............................................................................................................... 90

Sumber Kurnia Buana ............................................................................................................ 91 Suprabari Mapanindo Mineral ................................................................................................ 91

Tambang Damai .................................................................................................................... 91 Tanito Harum......................................................................................................................... 91

Tanjung Alam Jaya ................................................................................................................ 92 Tanjung Alam Raya ............................................................................................................... 92

Taraco Mining ....................................................................................................................... 92

PT Borneo Lumbung Energi & Metal Tbk: On the Road to Recovery – ix

Teguh Persada Coal ............................................................................................................... 92

Teguh Reksa Daya ................................................................................................................. 92 Teguh Sinar Abadi ................................................................................................................. 92

Tempayang Cemerlang .......................................................................................................... 93 Timah Batubara Utama .......................................................................................................... 93

Torah Antareja Mining .......................................................................................................... 93 Trimarta Coal Perkasa............................................................................................................ 93

Trimata Buana ....................................................................................................................... 93 Trimata Benua ....................................................................................................................... 93

Trimata Coal Perkasa ............................................................................................................. 94 Trubaindo Coal Mining .......................................................................................................... 94

Wadung Mas Tambang Mulia ................................................................................................ 94 Wadungmas Tambang Mulia ................................................................................................. 94

Wahana Baratama Mining ...................................................................................................... 94 Whirakaneo Coalindo ............................................................................................................ 94

Whiratama Bina Perkasa ........................................................................................................ 94 Yamabhumi Palaka ................................................................................................................ 95

List of Tables

Table 1 – Coal reserves in Indonesia, 2014 (million ton).................................................................. 6

Table 2 – Coal supply in Indonesia, 2000-2014 ............................................................................... 7 Table 3 – Existing coal terminals in Indonesia ................................................................................. 8

Table 4 – The most vital financial figures of PT Borneo Lumbung Energi & Metal Tbk,

2006-2014q3 ........................................................................................................... 14

Table 5 – BORN’s debts by signing dates and terms, 2005-2010 ................................................... 16 Table 6 – BORN’s loans, 2007q4 -2012q1 ..................................................................................... 17

Table 7 – Underwriters at BORN’s IPO ......................................................................................... 18 Table 8 – Corporate actions of Bakrie & Brothers regarding Bumi plc and BORN, late 2011 ........ 19

Table 9 – BORN’s IPO proceeds: Planned vs Reported in 2012 Annual Report (IDR mn) ............. 19 Table 10 – Subsidiaries of Bumi plc, June 2012 ............................................................................. 22

Table 11 – ARMS company financials, 2011-2014 £(M) ............................................................... 26 Table 12 – BORN’s Shareholders, March 2006 – Sept. 2014 (shares) ............................................ 33

Table 13 – Trading suspension dates of BORN’s stock in IDX, 20130701-20160801 .................... 33 Table 14 – BORN’s Board of Commissioners, Dec. 2007 – Sept. 2014.......................................... 34

Table 15 – BORN’s Board of Directors, Dec. 2007 – Sept. 2014 ................................................... 34 Table 16 – Corporate Officers in BORN group of companies, 2010 ............................................... 35

Table 17 – Related companies of BORN and transaction types, 2011-201409 (US$) ..................... 35 Table 18 – Related companies of BORN and transaction types, 2007-2011 (IDR mn) ................... 37

Table 19 – Third parties of BORN ................................................................................................. 37 Table 20 – BORN’s IPO underwriting fees detailed ....................................................................... 39

Table 21 – BORN’s IPO proceeds: Planned vs Reported in 2012 Annual Report (IDR mn) ........... 39 Table 22 – BORN’s outstanding loans, 20100630 .......................................................................... 40

Table 23 – The most vital financial figures of PT Borneo Lumbung Energi & Metal Tbk,

2006-2014q3 ........................................................................................................... 40

Table 24 – The financial structure of BORN (share of liabilities components to assets), 2009-

2014q3 .................................................................................................................... 41

Table 25 – Coal mineable reserves of BORN, March 2013 (mt)..................................................... 52 Table 26 – Coal resources of BORN, March 2013 (mt) .................................................................. 52

Table 27 – BORN’s coal deposits in Kohong and Telakong blocks, 30 June 2010 (mt) .................. 52 Table 28 – BORN’s performance in coal productions, sales, and price, 2007-2013 ........................ 54

x – PT Borneo Lumbung Energi & Metal Tbk: On the Road to Recovery

Table 29 – Tuhup coal product specification, 30 June 2010 ........................................................... 55

Table 30 – Grades of coking coal ................................................................................................... 57 Table 31 – Utilisation of installed capacity of BORN, 2007-2010H1 ............................................. 57

Table 32 – Third parties contracted in relation to barging and loading in ISP ................................. 59 Table 33 – Coal sales by marketers, 2011-2012 ($) ........................................................................ 60

Table 34 – BORN sales by country, 2009-2013 ............................................................................. 60 Table 35 – Management Boards of Asmindo Koalindo Tuhup, 1 Sept. 2010 .................................. 61

Table 36 – Changes in AKT shareholders, 1993 – 20091220 ......................................................... 61 Table 37 – The financials of AKT acquisition in 2008 and 2012 .................................................... 62

Table 38 – The financials of AKT, 2007 – 2010H1 ($) .................................................................. 62

List of Figures

Figure 1 – Gasification-based system concepts ................................................................................5 Figure 2 – Gasification chemistry ....................................................................................................5

Figure 3 – Coal distribution in Indonesia by calory class, 2014 ........................................................6 Figure 4 – Supply and export of Indonesian coal, 1997-2014 ...........................................................7

Figure 5 – Export share over coal production in top producing countries .........................................7 Figure 6 – Coal seaports in Indonesia, 2015 .....................................................................................9

Figure 7 – UK banks involvement in Indonesian coal companies ................................................... 10 Figure 8 – Share price of Vallar plc, Bumi plc, and Asia Resource Minerals plc, 9 July 2010 –

10 August 2015 ....................................................................................................... 11 Figure 9 – The owners of BLE ....................................................................................................... 13

Figure 10 - The net debt maturities of PT Borneo Lumbung Energi & Metal Tbk, 2012q1 ............. 14 Figure 11 - The debt burdens of PT Borneo Lumbung Energi & Metal Tbk, 2012q1 ...................... 14

Figure 12 – The flows of debts and stakes within companies related with PT Borneo

Lumbung Energi & Metal Tbk (BORN), Nov.2010 ................................................. 15

Figure 13 – The interests of BNBR and LHHL in Bumi plc, December 2011 ................................. 20 Figure 14 – The interests of BORN and Samin Tan in Bumi plc, June 2012 ................................... 21

Figure 15 – Bumi plc related companies, from shareholders to subsidiaries, June 2012 .................. 22 Figure 16 – The interests of BORN and Samin Tan in Bumi plc, prior to March 2014 ................... 24

Figure 17 – Heart of Borneo: Three countries, One conservation vision ......................................... 28 Figure 18 – Transfers of $15m loan of AKT .................................................................................. 36

Figure 19 – Transfers of $50m loan of BMS .................................................................................. 36 Figure 20 – Transfers of $75m loan of BORN ............................................................................... 36

Figure 21 – Transfer of advance and receivable of ETU in BMS and BORN to REM .................... 36 Figure 22 – Classification of asset structure, financial structure, and capital structure .................... 41

Figure 23 – AKT's coal deposit, 200511-201109 ........................................................................... 48 Figure 24 – BORN's coal specification, worldwide comparation .................................................... 48

Figure 25 – Indonesian coal producers by mine sites ...................................................................... 49 Figure 26 – Sea access of AKT as BORN's asset ........................................................................... 50

Figure 27 – The site map of Muara Tuhup and Damparan in Central Kalimantan........................... 51 Figure 28 – Mining activities cycle of AKT ................................................................................... 53

Figure 29 – BORN monthly production, Oct.2008 – June 2010 (000 ton) ...................................... 54 Figure 30 – Coal classification by energy content .......................................................................... 56

Figure 31 – Bulk carriers compared by size, from Handysize to Capesize ...................................... 58

how to unload the debt burdens

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