JAKARTA (Reuters) - The Indonesian coal miner accused of financial irregularities by London-listed Bumi Plc BUMIP.L, a coal venture founded by financier Nathaniel Rothschild, promised on Wednesday to act rapidly to resolve the matter as its credit rating was cut.
Bumi Plc launched a probe into potential irregularities in more than $500 million of funds at its Indonesian subsidiaries, including its 29-percent owned Bumi Resources (BUMI.JK).
The investigation will weaken Bumi Resources’ position in capital markets in the next year, Standard & Poor’s Ratings Services said, adding the firm had to refinance $400 million in 2013. It cut the rating one notch to B plus from BB minus.
Bumi Resources is Asia’s biggest exporter of thermal coal and the flagship company of the influential Indonesian Bakrie family. The Bakries, with other Indonesian investors, in turn control Bumi Plc.
“The management of PT Bumi Resources Tbk will be acting to resolve these matters as expeditiously as possible for benefit of all stakeholders and will make further announcements as appropriate in due course,” it said in a statement.
The company would comply with all its obligations under Indonesian law, the statement said. Bumi Resources had received no advance notice of the investigation, it said.
Bumi Resources shares have fallen just over 1 percent this week, while Bumi Plc has dropped 7.8 percent. The London-listed firm had fallen close to 25 percent on Monday.
Bumi Plc has highlighted irregularities of more than $500 million following allegations from a whistleblower. It has commissioned London law firm Macfarlanes to investigate.
But if the probe extends to loans to related parties as well as development funds, the sum in question could total $1.1 billion, said a source familiar with the investigation.
Bumi Resources had long-term debts of $3.9 billion at the end of June, Thomson Reuters data shows.
S&P said it would keep Bumi Resources ratings on negative watch pending the outcome of the investigation. On Tuesday, another ratings agency, Moody’s Investors Service, revised the outlook on the company’s credit status to negative from stable.
Bumi Plc was listed in London last year via a reverse takeover engineered by Rothschild, the 41-year-old scion of the centuries-old European banking dynasty, in a $3 billion deal with the Bakrie family.
They aimed to create an international coal-mining titan with mines in Indonesian Borneo, and one of the biggest listed companies on the London exchange.
But the partnership has steadily unravelled. Rothschild’s influence has waned since his role as co-chairman ended in March following public rancour with the Bakries and Bumi’s new co-chairman, Samin Tan. The Bakries and Tan now own 47 percent.
In November, Rothschild called for a “radical cleaning up” of the balance sheet and corporate culture at the heavily indebted Bumi Resources.
In a letter written to Ari Hudaya, then-CEO of both Bumi Plc and Jakarta-listed Bumi Resources, Rothschild expressed concern his Indonesian partners remained “over-leveraged”.
Hudaya resigned on Monday from Bumi Plc’s board after the firm launched its investigation into Bumi Resources’ so-called business development assets. Sources familiar with the investigation estimate those assets’ value at $293 million.
Writing by Matthew Bigg; Editing by Clarence Fernandez and Neil Fullick