Last few days, I bought 30,000 shares in Bumi Resources PLC (listed in London Stock Exchange - LSE) at GBP 1.50-1.70 after reading about a big drop in the share price because the company initiated an investigation into some malinvestments in the Indonesian coal mining companies which it has a share.
As of Sep 2012, Bumi PLC owns 85% of PT Berau and 29% of PT Bumi Resources (both listed in Jakarta Stock Exchange - JSE). Rothshild owns 12% of Bumi plc.
PT Bumi is largest thermal coal producer in Indonesia and world largest (10%) thermal coal exporter (Indonesia is 4th producer in world), and owns a 65 percent stake in Kaltim Prima Coal operation, or KPC, and 70 percent of the Arutmin mine (the other 30% of both companies owned by Tata Power Co. of India)
PT Berau is 5th largest coal producer in Indon.
My Read of What is Happening:
Those Indons screwed some whitemen (who probably got those assets cheap too) and their own country in 2001-03 by expropriating the assets for 'pennies on the dollar' (see American embassador's comments below)
Now either the Indons had been trying to screw the British Jew (by draining money from the Indon entities) or it is the other way round (by forcing Indons to sell cheap by pressing the Indon's share price and credit rating down, and triggering margin calls on the Indons whose callateralised shares may be sold off by their creditors - Credit Suisse - at low prices).
http://londonminingnetwork.org/2012/09/bumi-we-said-so-didnt-we/
If the former, the Indons will not get to live long!! With their shares listed in London, they would have to travel there regularly where the Jews will be able to get them (unless they sell off their London shares).
The latter possibility is backed by history - see Historical Notes at bottom - in fact, that was reportedly the view of the Bakries and their people (see chronology of events below).
In addition that 'kill' must be done before 2014 when the big brother of Bakrie Group will be standing for presidential election.
Whiteman - BHP used to own Bumi's Arutmin mine, Billiton used to be part of Shell in 1970s and the Rothshilds owns Shell - no doubt already eager for payback for the Bakries grabbing their assets in 2001-3. The Bakries must be politically neutered for this 'screw' to last (otherwise, they can always re-nationalise the assets again when they get to power!)
But the Indons seemingly got away by selling half their holding to chinaman (Tan) at 40% premium to market price. Question: why Chinaman paid premium to buy from distressed seller? Political pressure and/or to buy protection?
Then came rumours of split with between Chinaman and Indon, and Chinaman joining up with Rothshild to initiate the probe by Bumi plc (without Chinaman's vote, Jew & gang's vote is lesser than Indon & partner's) because Chinaman was not happy with 80% drop in value of his investment.
Or just a classic attempt to break-up the pairing?
To add on the pressure, Chinaman may also be squeezed by his creditor Standchart (since his $1B loan was also backed by the now 80% lower Bumi plc shares), and Jews offered him a deal he could not refuse...
A similar Indonesian view:
http://sahambumi.wordpress.com/category/bursa-bumi/
P/E Estimate = less than 5
2012 production: PT Bumi 45m tons; PT Berau 30m tons
Total Bumi plc share of production = 15m (29% PT Bumi) + 25m (85% PT Berau) = 40m tons
Assuming profit of $3/ton (out of coal price of $80-$120/ton),
profit attributable to Bumi plc = $3 x 40m = $120m giving PE of less than 5
(Bumi plc market cap is $550m based on 240m share @ 150p)
In 2011 Nov, Bumi plc announced target production of 140m tons/year by 2014 (PT Bumi 110m)
Operating margin is 30% but brought down by cost of financing.
Value Estimate based on coal reserves = at least $3 B = $12/share
Total coal reserves attributable to Bumi plc = 1 to 1.4 B tons or $3 to $4 B in profit (before other minerals)
PT Bumi coal reserves = 1.4 to 2.8 B tons. Bumi plc 30% share = 0.5 to 0.9 B tons
- marketing agents: Glencore for Arutmin; BHP for KPC
PT Berau reserves = 500m tons
Value estimate based on plan sale of FBS (2012 Oct 8) = $120/share
FBS has 14m tons of coal reserves, giving value per ton of $200m/7m tons = $30/ton
implying that value of Bumi plc's share of coal reserves (1B tons) = $30 B!
Value Estimate based on market cap of underlying = 30% of $700 + $500m = $730m = $2.5/share
Holding Structure:
Profit NAV (2011)
$200m $700m - PT Bumi (29%)
- PT KPC (65%)
- PT Arutmin (75%)
? - PT Recapital (?%)
- PT Bumi Resorces Minerals (87% with historical book value of $1.5B)
- Newmont Nusa Tenggara(24%) + other mines
- Gallo Oil (20%) in Yemen - sold @ $280m write off in 2011Q1
$130m $500m - PT Berau (85%)
Shareholding as of Oct 2012:
- Bakries (24%)
- Roeslani (10%?) - Bakrie's partner
- Samin Tan (24%)
- Rothschild (12%)
- Others like Blackrock, Shroeders, ADIA? (13%)
Analyst estimates:
2011Q1 Merril on PT Bumi: PE=10 @ Rp2,900
BUMI's CHRONOLOGY OF EVENTS:
1998 : Bakrie family defaulted on loans during Asian Financial Crisis. Credit Suisse gave lifeline
2001-2003 : Bakrie family used borrowed money to take over KPC from Rio Tinto and BP for $500m, and Arutmin from BHP for $190m with the help of 'pressure from nationalists to divest the assets to local interests'
("Our contacts at the time told us these deals undervalued the companies at pennies on the dollar," said the U.S. Ambassador to Indonesia, Cameron Hume, in a November 2007 classified diplomatic cable released by Wikileaks. Bakrie group executives, Hume added, have said they hoped to do more of these "value-oriented acquisitions."
"In the mining sector, cabinet minister Aburizal Bakrie has been most successful in using nationalism for his private personal gain," Hume noted in that cable.)
200?? : Bakrie family then sold the assets to Bakrie Group which then listed their coal holdings in PT Berau & PT Bumi in JSE. PT Bumi was bought from Bakrie family at $3.4B.
2005: Coal price = $36/ton
2006 Sep : US$3.2 B deal to sell PT Bumi to Samin Tan's company aborted. If successful, it would have made Bakrie family $2.5 B (their cost was $700m - see above)! Coal price = $52/ton
(Samin Tan used to work for HTM which was auditor for Indonesia's 1997 Crisis bank restructuring body IBRA)
2006 Dec : Drilling by Bakrie owned gas exploration company Lapindo Brantas resulted in 'Lapindo mud flow' with mud hole less than 500m from company's exploration well
2008 : Financial Crisis forced Bakrie Group to sell assets etc to answer margin call of $1.2 B. China Investment Corp (CIC) lent PT Bumi US$1.9 B @ 12% and LIBOR +6.67% (after Chinalco failed to purchase a stake in BHP Billiton because of political objections). Other PT Bumi loans @ 10%-12%
2008 Nov : Bakrie Group sold 35% of PT Bumi for $1.35 B (& supposedly at 61% discount from what Bakrie Group paid to Bakrie family) to PT Tambang Batubara Bukit Assam & TPG affiliate Northstar (which also controls PT Bank Tabungan Pensiunan, lender to Indonesia state pension fund)
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a3BbI81lzcPA
2009 Feb : Report of Northstar plan to convert bonds into share in PT Bakrie & Brothers and PT Bumi
http://www.thejakartaglobe.com/business/northstar-to-convert-trikomsel-bonds-into-equity/308658
2009 Nov : PT Multicapital (a subsiidiary of PT Bumi) led a consortium to buy 24% of Newmont Nusa Tenggara which owns Batu Hijau (gold & copper) mine and other proven copper and gold reserves (all valued at $3.5B conservatively). Also, report of plan by PT Recapital (of Bakrie Group) to buy major stake in PT Berau for $1.5B
http://www.thejakartaglobe.com/business/the-bakrie-group-coal-hard-cash-and-chinese-whispers/345131
2010 May : Indon tax authority charged PT Kaltim Prima Coal (KPC) of tax evasion by using transfer-pricing to sell product cheaply to a Cayman entity. Finance minister Sri Mulyani was later ousted
2010 Jun : Nathaniel Rothschild & Bakrie Group made US$3 B deal to list above Indon entities in LSE via Rothschild's shell company Vallar plc. Aim was to be create an Indon global resource company like BHP which have dual listing in home country and London.
("Vallar was the name of the coin given to the first Roman foot soldier who successfully stormed an enemy encampment and survived,” Rothshild told the WSJ in an interview in 2011
Rothshild did same 'reverse takeover' trick with another shell called Vallares in June 2011 with ex-BP fella and oil assets in Iraqi Kurdistan and made $230m - company renamed to Genel Energy plc in Nov 2011)
2010 Jul : Vallar plc raised GBP 707m @ 1000p/share in IPO. It then bought 85% of PT Berau for US$1.6B (= $740m + 52m shares @ 1000p) and 29% of PT Bumi for US$1.4B, and its name was changed to Bumi PLC in Aug 2011. Bakrie Group became largest shareholder with 48% of Bumi plc. Bumi plc price = 1000p
A report said Rothshild and 2 partners' original investment in Vallar was GBP20m but another report said Rothschild alone put in GBP 100m ($180m). One partner was ex-UBS banker, the other ex-head of coal mining in Anglo-American (so these fellas know what they are going after! Read also FT report in next link below)
http://ftalphaville.ft.com//2011/10/05/693766/bumi-and-the-bakrie-brothers/
Other big investors in Vallar include Abu Dhabi Investment Authority (ADIA) and Shroeders Bank
http://www.ft.com/intl/cms/s/2/3a8cd690-1ebd-11e0-a1d1-00144feab49a.html#axzz28ckd7jlB
2011 Mar : Bakrie Group consolidated all their debts via $1.35 B loan (from 20 lenders) led by Credit Suisse backed by by 50m (about half of their 48%) Bumi plc shares at minimum price of 850p (otherwise breach covenant?)
2011 May : PT Bumi announced that it was in talks to repay its CIC loan early as part of wider plan to reduce financing costs. Why specifically mention Chinaman? Bumi plc price = 1440p (PEAK!)
2011 Sep : Global share market collapse caused Bumi plc share to drop to 850p & triggered margin call on Bakrie Group's loans. Rumour that Rothschild was looking for other Indon partners to replace Bakrie.
http://www.reuters.com/article/2011/11/14/us-rothschild-bakrie-idUSTRE7AC00420111114
2011 Oct : PT Bumi cancelled $2 B deal (announced in June 2011) to sell 75% of PT Bumi Resources Minerals to Bumi plc. PT BRM is 87% owned by PT Bumi. Plan was for Bumi plc to exchange it with $2B CB to PT Bumi which will in turn swap CB (coupon 2% & conversion price 1588p) with existing CIC loans costing 19% interest
2011 Oct 6 : Report that Credit Suisse sold Bakrie's PT Bumi shares in 'crossing trades' (i.e. off-martket sale) to the bank's own clients - wonder who? - of 1.2m lots @ Rp2,250 valued at IDR 1.36T (= US$150m)
http://en.bisnis.com/articles/bakrie-and-brothers-to-get-new-debt-to-refinance-us$597-million-loan
2011 Nov : Bakrie Group sold half of 48% share (at 1090p/share or 40% premium to market) in Bumi plc to PT Borneo Lumbung Energi (coking coal company controlled by Samin Tan) for US$1 B (financed by Standchart) to payoff most of $1.35 B debt to Credit Suisse. Bumi plc price = 750p; Coal spot price = $100/ton
2011 Nov : Rothschild made public via Financial Times his letter to PT Bumi CEO urging 'radical cleaning up' of PT Bumi and a timetable for the “repatriation of funds deposited with connected parties”. (CCK: because he was pissed he could not get his hands on Indon's share??)
http://www.reuters.com/article/2011/11/14/us-rothschild-bakrie-idUSTRE7AC00420111114
(Note: The FT is considered by many as the mouthpiece of the big money interests and often used to further their interests. See LIBOR manipulation writeup http://cckplanetblog.blogspot.sg/2012/07/libor-manipulation.html)
2011 Dec : Bumi plc wrote off its share of 'extensive development funds' (of $400m) in PT Bumi and an asset in PT Berau after its auditor PWC said they were 'unable to verify the underlying assets'. Writeoff = US$637m but rumours that total involved may be $1.1 B
2012 Feb : Indonesia government enacted law requiring at least 51% local ownership of mines by their 10th year of operation. Another law enacated in Jan stops export of some raw metals by 2014 (coal exempted)
http://www.4-traders.com/FREEPORT-MCMORAN-COPPER-12574/news/Indonesia-says-mine-rules-not-just-aimed-at-Freeport-14204612/
http://blogs.wsj.com/deals/2012/02/06/nat-rothschild-and-the-bakries-its-complicated/
http://www.reuters.com/article/2012/02/16/us-bumi-idUSTRE81F1H620120216
http://www.bloomberg.com/news/2012-02-20/rothschild-likely-to-remain-on-bumi-plc-board-bakrie-group-says.html
2012 Mar : Bumi pls announced Rothshild ended co-chairman role - replaced by Samin Tan (PT Borneo Lumbung) - and became independent director, and 2011 loss of $282m (after adjusting operating profit of $280m with one-time writeoffs relating to setup of Bumi plc). Bumi plc price went up to 725p
http://www.thejakartapost.com/news/2012/03/28/bumi-plc-restructures-top-positions-end-infighting.html
2012 Apr : Bakrie breached loan covenant for $440m loan from Credit Suisse led lenders backed by 24% share in Bumi plc resulting in margin call of $100m. In June, Bakrie asked banks for more time to resolve financing issue. Bumi plc price fell 8.5% to 435p
http://www.bloomberg.com/news/2012-04-23/bakrie-creditors-ask-for-extra-100-million-as-bumi-shares-fall.html
2012 H1 : Coal prices at Australia’s Newcastle port, an Asian benchmark, have fallen 21 percent this year as the Chinese economy slowed and after U.S. and South African producers shifted coal sales to Asia amid the debt crisis in Europe.
2012 Jun : PT Bumi announced contract to sell 50m tons in 2012 @ $80/ton (vs market forecast of $130-$140?)
2012 Aug : PT Bumi announced loss of US$322m for 2012H1 (vs $232 profit 2011H1), and that subsidiary PT Recapital failed to return $231m investment to the parent company. PT Bumi share dropped 12%. Bumi plc price = 300p; Coal price = $90/ton
2012 Sep 19 : PT Borneo reported to be in discussion to sell 20% stake in its coal mining unit to Posco for $500m to reduce its $1 B debt for Bumi plc deal
http://uk.finance.yahoo.com/news/1-indonesia-miner-borneo-lumbung-105932916.html
2012 Sep 24 : Bumi plc announced start of investigation on above bad investment. Share price dropped from GBP 2.80 to 1.50. Indonesian directors of Bumi plc complained that they were not informed of that decision beforehand. Over next 2 days, S&P and Moody's cut their credit ratings on PT Bumi due to concerns about ability to repay debts. Bumi plc price = 150p
http://www.guardian.co.uk/business/feedarticle/10452864
PT Bumi total long-term debt = $3.9B; $400m due 2013.
PT Bumi 2017 bonds with 10.5% coupons dropped by 25c to 68c giving effective interest of 20%!!
2012 Sep 27 : MSN report rumours that Bakrie and Tan may split due to all the problems and share price drop, and Tan may link up with Rothshild. (CCK: may be chinaman also found out he was being screwed by Indon!)
http://www.msnbc.msn.com/id/49194021/ns/business-world_business/t/exclusive-indonesias-bakries-could-split-tycoon-tan-over-bumi-dispute/
2012 Sep 27 : PT Bumi issued statement that "There is an attempt to damage the inherent value of our business by orchestrating internal issues publicly--for motives which appear dubious." (CCK: Just 3 years short of 200th anniversary of the 'Waterloo Screw'!)
http://www.bloomberg.com/news/2012-09-27/bumi-resources-questions-motives-of-london-probe-southeast-asia.html
A week laterm the President Director of PT Bumi who resigned as board memeber of Bumi plc said some thing similar to the Indonesian press
http://www.theindonesiatoday.com/news/finance-news/item/884-bumi-deplores-bumi-plc.html
2012 Oct 1 : Bakrie Group announced they will repay $437m loan to Credit Suisse
http://www.reuters.com/article/2012/10/01/us-bakrie-debt-idUSBRE8900ED20121001?type=companyNews
2012 Oct 2 : PT Bumi issued statement that it is considering sale of assets and rights issue to accelearate pay off debts.
http://www.bloomberg.com/news/2012-10-02/bumi-resources-to-raise-cash-to-pay-debt-after-exchange-query.html
2012 Oct 8 : Report of talks to sell half of PT Fajar Bumi Sakti (FBS, a unit of PT Bumi) for $200m
http://www.reuters.com/article/2012/10/09/us-bumi-sampoerna-idUSBRE89803120121009?feedType=RSS&feedName=innovationNews&rpc=43
http://www.theindonesiatoday.com/news/resources-news/resources-photo/item/887-bumi-to-divest-fajar-bumi-this-year.html
2012 Oct 12 : Bakries offered to buyback Bumi Plc's holdings in the Indonesian coal companies
http://www.bloomberg.com/news/2012-10-11/bumi-plc-gets-proposal-from-bakrie-group-on-bumi-resources-swap.html
HISTORICAL NOTES :
For hundreds of years, big time financiers made big money by being bankers to big time borrowers by lending money to those people (especially sovereigns since they controlled the most assets but are the least financially savvy of the lot) with mining shares as collaterals and ending up taking over those hard assets and becoming filthy rich after the borrowers defaulted on their loans.
Examples were the Fuggers family of Europe in 15th century, Rothschilds in 17-18th century, and the Russian oligarghs of the 1990s (after collapse of USSR).
In the late 19th century after the invention of the petrol engine, petroleum oil was where the big money was and thus where the big financiers of that time (like Rockefellers and Rothschilds) were zooming in to control.
The Caspian region in Russia was then the largest producer of oil - that area produced half of the world's oil in 1900.
While the Rockefellers controlled most of the US oil market (which was therefore out of reach), the Rothschilds muscled into the Caspian region and later Indonesia (initially controlled by Royal Dutch Petroleum).
Even though the largest Caspian oil producer then was the Nobel family's Branobel - 'Brothers of Nobel' - (that's where the money for Nobel prizes came from), the Rothschilds' Royal Dutch Shell was 2nd largest and controlled 36% of its foreign exports.
Royal Dutch Shell was formed in 1907 when the Shell Transport and Trading Company (a shipping company owned by Rothschilds' agent Marcus Samuel to ship Caspian oil to Asia) merged with Royal Dutch Petroleum supposedly to counter competition from Standard Oil controlled by Rockefeller which were also trying to get to the oil assets outside of the US.
Shell bought the mining company Billiton in 1970 but sold it later to form BHP Billiton (who control this company?).
After Lenin nationalised the Caspian oil assets (which by then were 70% controlled by the Americans and west Europeans), the head of Shell (backed by who else?) announced that the Russian communists will not last more than 6 months. They obviously knew how much power they possessed.
During the Russian revolution, Lenin & his deputy Trotsky were not even in Russia i.e. the revolution was other people's work and not theirs. Lenin returned from Switzerland and Trotsky from US only after the revolution was successful. Like Hamid Karzai of Afghanistan and al-Maliki of Iraq, they were 'posted' there by outside powers - as a result, 'return of favours' was expected.
The deal maker behind Vallar (later renamed Bumi plc), Nathaniel Philip Rothschild (Nat) is the youngest of four children and the only son of Jacob Rothschild, 4th Baron Rothschild. He is also the bearer of a name that links him indelibly with the 19th-century founder of the eponymous family bank: the buccaneering Nathan Mayer Rothschild.
Established in London via a Frankfurt ghetto, Nat’s Georgian ancestor built his fortune by shipping bullion to Wellington’s army in Portugal and Spain. In doing so, he cemented an image of savvy financier which has been associated with the family ever since. Legend has it that Nathan, on receiving news of Napoleon’s fate in the Battle of Waterloo (June 1815) in advance of the British government, sold stocks to cause market panic before buying them back on the cheap - news of Wellington's death was spread causing people to think that Britain had lost the battle and therefore dumped their London stocks.
Can see how some people get to buy things on the cheap? It is certainly not through hard work or fair play.
Life Lesson 1:
Great riches come from controlling rich resources and finances.
Most of the richest people/families in history get rich by controlling the extraction of key resources or financing such operations. Examples in history: Fuggers (15th century central European mining), Rothschilds (19th centruy Caspian Oil and Shell), Rockefellers (Standard Oil)
It is the reason why throughout history people invade foreign lands - to loot and control other people's resources. People like Alexander the Great, Arabs, Turks, Spanish Conquistadors etc invade Persia, Egypt etc. largely to loot the wealth (esp. gold and silver) of those rich empires.
Another example: Australia, despite their huge natural resources from their large island, still go to rob from East Timor. They did not support East Timor's independence from Indonesia in 1998 because of some moral reason. It was because large oil and gas deposits were discovered in the early 1990s in the seas between Australia and East Timor. In a dispute on who gets to own more of the resources there, it is always better to deal with a smaller and weaker country (East timor) compared to a larger one (Indonesia) - oil and gas fields do not follow man-made borders.
Similar example: Qatar's North Field (controlled by Exxon Mobil) and Iran's South Pars gas fields are part of the same natural gas structure. One can then see why some people want to keep Iran from selling oil and gas through sanctions (on pretext that Iran is developing nuclear arms etc.). 1 party drawing from an oil tank is better than 2 profiting from it - it is called 'monopoly'.
Life Lesson 2:
Banks make profits only if borrowers return their money with interest. Defaults or non-return of money bankrupt the banks.
For that reason, banks go to great lengths to make sure they get their money back and potential defaulters think thrice before doing so. That is why only big banks would lend money to big-time and powerful operators (like dirty Indonesian politicians). Only big banks can 'guarantee' protection of their loans - by buying influence in powerful countries and organisations which can help them get their money back or teach defaulters a 'lesson'.
There is a saying that 'if you owe the bank $100 it is your problem but if you owe the bank $100m it is the bank's problem!'
In condeming the various foreign invasions he was personally involved in, Smedley Butler (the most decorated military man in US history) said that 'War is a Racket' (also title of his book) and the US military acted as 'gangster for capitalism'.
http://ocoathkeepers.wordpress.com/2011/09/28/general-smedley-butler-war-is-a-racket/
Life Lesson 23
Good men always acknowledge and tell the truth, and speak up for what is right. (read Smedley Butler)
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