Berau Coal's former head refuses to leave office

By Daniel Stanton

SINGAPORE, May 20 (IFR) - The proposed restructuring of Berau Coal Energy took another farcical turn, as parent company Asia Resource Minerals (LSE: ARMS.L - news) said former Berau president director Amir Sambodo had refused to vacate his position and would not let his replacement or the CFO into the firm's head office.

ARMS said Sambodo had resigned on March 25, but his replacement, Iskak Wahyudi, was not able to take his seat until the minutes of Berau's extraordinary general meeting of April 30 had been lodged.

The company is currently in talks with the Indonesian Financial Services Authority and the Indonesian Stock Exchange, which have raised concerns about potential irregularities in the EGM.

ARMS, which holds an 84.7% stake in Berau, has said Sambodo "purports to continue to remain in his position as president director and is engaging in conduct that is wholly unsupported by the company and to the detriment of the ability of the company to maintain adequate supervision and control of the PT Berau Group".

It also said that the company's CFO, chief mining officer, new president director and new president commissioner were being denied access to the head office and had only limited access to Berau's IT, accounting systems and bank account information.

Moody's yesterday downgraded Berau's bonds and its corporate family rating to Caa2 from Caa1, both with a negative outlooks.

"The downgrade to Caa2 reflects Moody's view that it is increasingly uncertain whether BCE (Toronto: BCE-PA.TO - news) will be able to execute its proposed notes exchange prior to the maturity of its bonds on 8 July 2015" said Brian Grieser, a Moody's vice president and senior analyst.

"Competing bids to acquire the equity of Asia Resource Minerals (ARMS), an 84.7% owner of BCE, have already delayed restructuring plans and will obstruct restructuring efforts until the board of ARMS reconvenes its general meeting of shareholders to vote on the proposed restructuring plan and the ARMS acquisition proposals."

Berau's US$450m 2015 bonds were quoted at 58/60 today, according to Tradeweb, unchanged from yesterday.

ARMS adjourned a vote scheduled for last week on the proposed restructuring and had yet to announce a new date.

There have been two rival approaches for ARMS. Asia Coal (HKSE: 0835.HK - news) Energy Ventures, a vehicle managed by hedge fund Argyle Street Management and funded by the Widjaja family's Sinarmas Group, launched a takeover bid last month, before NR Holdings, in partnership with Russia's largest coal producer, Siberian Coal Energy Company (SUEK), expressed an intention to launch an offer. (Reporting by Daniel Stanton, editing by Dharsan Singh)