01 May 2018

Deal Wrap: The restructuring of PT Bumi Resources Tbk

KWM advised China Development Bank on the multi-billion dollar debt restructuring of Indonesia's largest thermal coal producer, PT Bumi Resources Tbk – Southeast Asia's largest debt restructuring deal of 2017.

This matter represents one of the most complex restructurings in the region's recent history, requiring KWM to demonstrate its regional strength and seamlessly integrated bi-lingual cross-border team. 

The court-mandated restructuring resulted in lenders exchanging existing debt for new debt and securities – comprising senior loans and notes, shares or subordinated debt instruments, mandatory convertible bonds, and contingent value rights.

Find out more about the restructuring of PT Bumi Resources Tbk in the video below, in which co-lead partner Andrew Deszcz discusses:

  • Why the restructuring was required
  • KWM’s role on this transaction and the advising team
  • How the firm was uniquely positioned to navigate complexities on an international scale.

Show transcriptHide transcript

Why was the restructuring required?

The situation concerned PT Bumi Resources, which was an Indonesian listed firm or coal producer with a number of operating mines setting up of prospects around the world.

Now in around about 2014, probably for a few years before that, Bumi was hit by declining thermal coal prices - like a lot of producers around the world.

Bumi however had a very heavy debt load, roughly US$4.2 billion at that stage - give or take a few hundred million.

They tried to negotiate a consensual restructure with their lenders. However, they weren’t able to do that quite at the time as you can appreciate talking to a very large number of lenders. Consequently they ended up with in insolvency courts, following a procedure called the Indonesian PKPU procedure.

What was King & Wood Mallesons’ Role?

We acted for China Development Bank.

China Development Bank (CDB) had lent around US$600 million to Bumi in 2009 and they were obviously caught up in the restructuring.

As a Chinese State‑owned bank, CDB were subject to a number of regulatory requirements which mean that the restructuring proposal as put to the other banks was more difficult for them to implement.

What did King & Wood Mallesons bring to the equation?

Now I genuinely believe that KWM was uniquely placed to assist China Development Bank in this role. The reason for that is two‑fold:

  1. I don’t think any other law firm has the level of depth and understanding of Chinese regulatory requirements, as well as how a bank likes CDB would operate in practice when facing a restructuring situation.
  2. The second thing of course we bring to the table was our expertise in negotiating restructurings and new debt facilities following restructurings.
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