SINGAPORE/JAKARTA: PT Bumi Resources Tbk is “highly likely” to miss payment on US$375 million (RM1.2 billion) of convertible bonds in August if holders don’t agree to a proposal to delay payment, it said in a memorandum to noteholders.

The Indonesian coal miner is seeking consent to amend the terms of the bonds, including extending the debt’s maturity to July 2021 from Aug 5 and cutting the annual coupon to 7% from 9.25%, according to a June 5 consent solicitation memorandum obtained by Bloomberg News. It hasn’t paid the coupon that came due on June 5, the document shows.

“The delay in bond maturity will give them some breathing space to repay bondholders,” Amit Jain, a credit analyst in Bangalore at SJS Markets Ltd said. “The trouble is, they’re already finding it difficult to pay some bond coupons” and there will continue to be “liquidity pressure without any recovery in coal prices,” he said.

The bond restructuring represents another obstacle to the miner that’s trying to ease its financial burden after coal prices extended a two-year slump to the lowest level since 2009. The group is negotiating with lenders including Deutsche Bank AG and China Development Bank Corp to help ease US$4.7 billion of short-term liabilities.

Dileep Srivastava, a Bumi director in Jakarta, declined to comment on the contents of the memorandum.

The convertible notes fell for a second day, losing 3.3 cents to 35.34 cents on the dollar as of 1.28pm in Hong Kong, according to Bloomberg-compiled prices. They have lost 30% this year through yesterday, while the stock slumped has 35% in Jakarta in the same period.

Bumi avoided a default on Wednesday by paying an overdue 12% coupon on its US$300 million November 2016 bonds, according to a filing with the Indonesian stock exchange.

The group refinancing plans also entail selling as many as 26.17 billion of new shares to repay US$1.3 billion to China Investment Corp, according to a statement last month. That comes after the completion of a US$501 million break-up in March from a venture with UK financier Nathaniel Rothschild.

Holders of the convertible bonds have until June 18 to give their consent to the amendments, according to the company. The resolution will require at least 75% of votes cast at a bondholders meeting to be held on June 20 in Singapore, according to the document. — Bloomberg

This article first appeared in The Edge Financial Daily, on June 13, 2014.