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Widjaja clan seeking acquisition support in Singapore

[SINGAPORE] Indonesian billionaire Eka Tjipta Widjaja is getting support from Singapore financiers to fund expansion as he bids for a London-listed mining company.

A reverse takeover last month created the family's fifth Singapore-listed company, coal miner Golden Energy & Resources Ltd, while palm-oil producer Golden Agri-Resources Ltd tapped the city's bond market twice in the past five weeks. Widjaja's also seeking control of Asia Resource Minerals Plc, a route to becoming one of the top four coal producers in his home country.

Investors have funded the five Singapore entities with S$4.3 billion of loans and bonds to help Widjaja build an empire with a market value of US$7.5 billion on the city's stock exchange, data compiled by Bloomberg show. His latest ambitions and the backing he's winning from investors show how far the 91 year-old has rebounded from the US$13.9 billion Asia Pulp & Paper Ltd default in 2001.

"It was interesting to see how they scraped through without having to dismantle their business," said Robert Appleby, co-founder of Asia Debt Management Hong Kong Ltd, which was a creditor in the APP debt restructuring. "The people with the longest staying power ended up on top. So today, as the manifestation of that, you have the Widjajas once more, a generation has moved on and their offspring largely driving their second coming."

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The ARMS bid is being undertaken by the family's Sinarmas group via its Asia Coal Energy Ventures Ltd vehicle, which was vying with UK banking scion Nathaniel Rothschild until the financier abandoned his plan last week.

Sinarmas is targeting ARMS to gain control of its 85 per cent of PT Berau Coal Energy, Indonesia's fifth-largest coal miner. A successful deal would be a boon for the family's Golden Energy unit, headed by the tycoon's 33-year-old grandson, who has said the companies could combine to become one of Indonesia's four biggest producers.

Berau would come with some big challenges. The miner's bondholders have watched their investments halve in value over the last year amid boardroom spats and tumbling coal prices. It must repay a US$450 million bond due July 8 and ARMS said in March that there wasn't enough cash for noteholders.

"Sinarmas is the best chance for Berau to recover and pay off the almost $1 billion in debt," Fuganto Widjaja, who oversees the family's energy and infrastructure business and heads Golden Energy, said in a May 13 e-mail.

Berau also has until March 2017 to repay US$500 million of 7.25 per cent notes. The distressed notes have started to rebound this month, climbing from 51.6 cents in the dollar at the end of April to 57.7 cents on Friday at 9:38 am in Singapore. Its 12.5 per cent bonds due 2015 have climbed 6.1 cents to 60.9.

In March 2001, Asia Pulp & Paper halted payments on US$13.9 billion owed to creditors following a plunge in global paper prices. The default, coming in the wake of the Asian financial crisis, included about US$6.7 billion of US dollar bonds, the biggest missed obligation by an Asian company to date. The resulting debt settlement stretched out for at least 15 years.

"The restructuring is going on according to schedule. Some have been repaid, especially those under Indonesian operating companies," Gandi Sulistiyanto, Sinarmas's managing director in Jakarta, said by phone on Wednesday. "So far so good." Sulistiyanto wasn't available to comment further on the group's Singapore plans on Thursday.

Sinarmas's energy ambitions coincide with Indonesian president Joko Widodo's plan to build plants with a combined capacity of 35,000 megawatts of electricity over the next five years to power an economy suffering the slowest growth since 2009.

Mr Widjaja's listed entities in Singapore and at least 10 others in Jakarta had a combined market value of about US$17 billion on Wednesday, according to data compiled by Bloomberg. That compared with about US$15.5 billion at the end of 2010.

"Singapore is an excellent capital market for them to raise money from, which is probably what they had in mind when the five entities built their presence here," said Nirgunan Tiruchelvam, who follows Golden Agri as an analyst in Singapore at Religare Capital Markets. "To their credit, they have put the APP episode behind them." In addition to the palm-oil producer and Golden Energy, the other companies listed in Singapore comprise Sinarmas Land Ltd., Indonesia's largest developer, Bund Center Investment Ltd and Top Global Ltd, run by Mr Widjaja's daughter Sukmawati.

Golden Agri returned to the Singapore market on May 19 to ask investors to buy more of its 2018 bonds. It sold S$75 million worth of the notes, after getting 40 per cent more orders than it sought in the initial S$125 million sale on April 21.

"As a survivor, I'm very conscious - not just with the Widjajas but with everyone - of the debt-carrying capacity of companies," said Asia Debt Management's Appleby. "If they have the cash flow that can service debt and generally are minded to service that debt, then it's probably good enough."