Bumi Resources (BUMI.IJ) Price Target Rp4,000-BUY

Stock: Bumi Resources (BUMI IJ - Rp2,600)
Rating, Price target: BUY, Rp4,000
Market cap, ADTO: US$6.3b, US$34.9m

Event: Further details of proposed share buy back
• Bumi has announced details of its planned share buyback plan this morning in an
announcement in the local press.
• Bumi has proposed a maximum buyback of 780m shares or 3.75% of the total on issue
for up to Rp 3.9t (USD 459m). This equates to a maximum share price of Rp5,000/sh.
• The buyback of shares is to ensure sufficient treasury stock is available to cover
redemtpions of USD375m convertible bond due 2014.
• We estimate Bumi will look to acquire at least 635m ordinary shares (or 3.1% of
its capital base) in order to hold enough shares to cover redemptions of the
convertible bond (see below table for details)
• The conversion price of Rp 3,366.0/sh attached to the convertible is currently out
of the money for bond holders.
• Under Bapepam rules, the purchase price can be no higher than the maximum of the
prior 90 days trading price. The duration of the buyback is for a maximum of 18
months from the date of shareholder approval.
• The share buyback is proposed to be on and off market in nature, meaning Bumi
can acquire shares directly from shareholders not via the exchange if necessary.
Shareholders will be asked to approve the buyback scheme on September 26.

Balance of bond (USD) 375,000,000
Parcels of $100k lots 3,750
Shares per $100k lot 295,524
Total potential share requirement 1,108,213,830
Number of treasury shares already held 473,212,607
Number of shares to be acquired 635,001,223
Total number of shares on issue 20,773,400,000
Proportion of shares to be bought 3.1%

Source: CLSA Asia-Pacific Markets