ARM moves ahead with debt restructuring plans

OREANDA-NEWS. March 19, 2015. Indonesia-focused coal mining firm Asia Resource Minerals (ARM) has reached an in-principle agreement with key bondholders on the terms to restructure debt due this year and in 2017.

ARM, the parent company of Indonesian coal producer Berau, last month said was negotiating with shareholders to agree an extension to \\$450mn of Berau's debt that is due to expire in July and another \\$500mn due in 2017.

Key bondholders, including unnamed parties holding around 23.7pc of the outstanding notes, as well as financier Nathanial Rothschild-led NR Holdings, have agreed in principle to exchange their existing notes into new notes maturing in July 2019 and December 2020, ARM said.

ARM is focusing on consolidation, cost-cutting measures and efforts to boost profits after a protracted split from Indonesian conglomerate Bakrie was finalised last year, leaving it with debts of more than \\$500mn. Profit margins at Indonesian coal producers have also been hit by a slump in prices since 2013, largely because of a continuing supply glut.

Rothschild last month agreed to a \\$100mn equity injection to help ARM restructure its debt and avoid a potential default on the bonds.

Berau is Indonesia's fifth-largest coal producer. The firm is aiming to boost output this year by around 5-10pc from 2014, putting it on track to produce up to 26.6mn t, as it seeks to maximise cash flow amid low prices.

Berau is aiming to open new pits producing higher calorific value coal and is targeting higher return markets such as Japan. It is reducing the marketing rates it pays to firms that handle its exports and is aiming to cut transport and fuel costs.