PT. Bumi Resources Tbk. Presentation of the Revised Restructuring Proposal

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2 PT. Bumi Resources Tbk. Presentation of the Revised Restructuring Proposal 28 September 2015

3 Contents 1. Disclaimer and Conditions 2. Status of the Restructuring Exercise 3. The Revised Restructuring Proposal Basis for the Revised Restructuring Proposal The Revised Proposed Terms Benefits to All Stakeholders 4. Update on Company s Performance 5. Next Steps& Estimated Timeline 2

4 1. Disclaimer & Conditions

5 Disclaimer & Conditions Disclaimer This Proposal is a revision to the Restructuring Proposal dated 20 April 2015, which was presented to creditors and/or advisors that entered into nondisclosure agreements with the Company. This Revised Restructuring Proposal is now presented to all creditors under purviewand instructions of the Singapore Court pursuant to the Section 210 (10) of the Singapore Companies Act. An all creditors meeting ( First All Creditors Meeting ) is scheduled to be convened on 28 th September 2015 with the objective of presenting this Revised Restructuring Proposal to creditors and to obtain any feedback from creditors on the proposed terms. We understand creditorshave received notification of this meeting from your respective facility agents and trustees and were requested to register your attendance and provide necessary evidences of your debt holdings to your respective facility agents / trustees, who has in turn confirmed your attendance with the Company. Notwithstanding the above confirmation by your facility agents / trustee, creditors attendance at the First All Creditors Meeting is not deemed as the Company s acceptance of your debt claim and the Company reserves its rights to request all the necessary documentation to verify, accept or challenge your purported debt holdings. Conditions of Proposal This Proposal set outs key terms and abroad framework for the proposed restructuring and is subject to negotiations and necessary consents to be obtained from creditors and shareholders pursuant to the relevant facility agreements, bond indentures and/or inter-creditor agreement as well as any relevant laws and regulations. This Proposal is indicative and subject to definitive legal documentation, that is in form and substance satisfactory to all parties in all respects and shall not contravene any relevant regulations or any court orders that may be issued. This Proposal is only a summary, and does not purport to be a comprehensive or exhaustive statement of the requirements of the parties or information relating to the contemplated restructuring (including, but not limited to, requirements of other lenders). For the avoidance of doubt, nothing in this Proposal shall amend any term of the existing credit agreements and indenture or constitute a waiver of any right of any party under the respective documentation. 4

6 Disclaimer & Conditions This Proposal is presented on a without prejudice basis. Nothing in this Proposal waives any rights of Bumi or any member of the Bumi Group under each debt and security documentation entered into with any creditor or under applicable law. This Proposal contains terms that are subject to negotiations and consents from all affected creditors as required under each debt documentation, approval by shareholders as well as acceptance by certain relevant regulatory authorities including but not limited to OJK, IDX and MEMR.The terms set out herein may be negotiated, altered or amended until such time definitive documentation are entered into by all relevant parties and the requisite approvals are obtained pursuant to any scheme of arrangement and/or as sanctioned by the relevant courts The shares to be issued in connection with the proposed debt conversion will be based on terms that comply with the requirements of the Otoristas Jasa Keuangan/ Financial Service Authority, Indonesian Stock Exchange as well as Ministry of Energy and Mineral Resouresin respect of the CCOWs and would require the necessary regulatory approval as well as necessary protection against undesired dilution or change of ownership pursuant to the Indonesian Capital Markets regulations. The alternative option of a bankruptcy of Bumi would likely result in a loss of the CCOWs currently held and consequently, little or no recovery to the creditors, let alone any value to be returned to the shareholders. This would be an undesired outcome to both creditors and shareholders. Applicable Terms under Other Regulations There may be terms that are applicable under other relevant regulations or in the event alternative or secondary formal proceedings are pursued in other jurisdictions, These terms will be comprehensively set out in the restructuring documentation as and when necessary. 5

7 2. Status of the Restructuring Exercise

8 Status of Restructuring Exercise July 2013 Early 2014 July 2014 October 2014 November 2014 December 2014 Restructuring of US$1.9bn of debt owing to CIC which reduction of US $1.35bn debt via equity conversions ( CIC Restructure ) Consents under Inter Creditor Agreement ( ICA )obtained circa July 2014 Consent solicitation with Enercoal s Convertible Bonds ( Enercoal Bonds ) involving extension of maturity and reduction of coupon rates Whilst this was consented to as part of the CIC Restructure, accession to the inter-creditor agreementdid not occur. Commenced restructuring discussions with Lenders on a piece-meal and adhoc basis Appointment of FTI Consulting to assist with comprehensive restructuring exercise Proposal from Houlihan Lokey representing an adhoc committee formed by certain parties purportingto be holders of bonds ( Senior Notes Ad-Hoc Committee ) issued by Bumi Investment and Bumi Capital ( Senior Notes ) Commencement of due diligence by Houlihan Lokey Bumi Investment, Bumi Capital and Enercoal applied and obtained Singapore Section 210(10) stay of proceedings on 24 November 2014 A 6 months moratorium was grantedon any actions to be taken against the 3 entities and Bumi with monthly update reports to be submitted to the court. Initiated discussion with Moelis, the financial advisor to the committee of the Enercoal Bonds, who commenced due diligence. Applications submitted on 2 December 2014 for Chapter 15 recognition of the Section 210(10) orders to ensure same protection in the US. Provisional relief was granted on 18 December 2014 and recognition order was issued on 22 January 2015 A meeting was convened with various banks, whichprovided bilateral loans to Bumi ( Bilateral Bank Lenders ) and a formal standstill was requested to allow time to formulate restructuring proposal 7

9 Status of Restructuring Exercise January 2015 February 2015 April 2015 May 2015 August 2015 September 2015 Notifications on suspension of servicing of interest or making of principal repayment pending completion of restructuring Formation of a committee by the Bilateral Bank Lenders PWC was engaged by CDB as financial advisor to CDB and commenced due diligence Application to set aside Section 210(10)stay of proceeding by the Senior Notes Ad-Hoc Committee. Appointment of Borrelli Walsh as financial advisor to Bilateral Bank Lenders committee and commencement of due diligence by Borrelli Walsh Revised proposal from the Senior Notes Ad-Hoc Committee. Issuanceof Restructuring Proposal by Bumi on 20 April 2015 Commencementof discussionson the Restructuring Proposal with different creditor groups / committees and/or respective advisors Obtained extension of Section 210(10) stay of proceedings for a further 5 months expiring 24 October 2015 Counter proposal from the Senior Notes Ad-Hoc Committeevia Houlihan Lokey receivedon20 August 2015 Appointment of KPMG bycic as its financial advisor and commenced due diligence Counter proposal from Bilateral Bank Lenders committee via Borrelli Walshreceived on2 September 2015 Court hearing on 3 September 2015 on applicationby the Senior Notes Ad-Hoc Committee to set aside the Section 210(10) moratoriumwas adjourned with parties agreed to: Update to court on18 September (later to 1 October) and 13 October Revised proposal and all lenders meeting to be held by 30 September Restructuring framework to be agreed by 15 October 8

10 3. The Revised Restructuring Proposal

11 Proposed Sustainable Debt Level Basis for Revised Restructuring Proposal Coal prices have remained depressed with significant uncertainties surrounding the prices going forward. As such, to avoid payment default, the availability of cash flow to service debt has been conservatively estimated. This has therefore resulted in the Company s ability to sustain only a limited amount of debt at a reduced interest rates. Based on the conservative cash flow forecast, the Company is able to sustain a total debt of US$1.2 billion to be retained asnew Senior Secured Facility, which amounts to 42.3% of the respective principal debt owing (except for CIC/CDB s debts which is lower). This sustainable debt amount would in turn provide improvement in the equity value of the Company which benefits all creditors considering the proposed equity conversion. There are opportunities for coal prices to improve in the short term, in which instance, the Proposal provides for the excesscash flow (after operational, capex and cash buffer needs) to be used to pay down the New Senior Secured Facility over a shorter period of time. The proposed cash sweep mechanism and waterfall ensures that the affected creditors would receive benefits of early prepayment of debt. Given the cost reductions initiatives have medium to long term impacts on liquidity with coal prices remaining low, the Company is unable to make any meaningful debt repayment in the short termand proposes a grace period and minimal loan repayments in the initial period for the New Senior Secured Facility. Proposed Debt to Equity Conversion The proposed equity conversion is based on a valuation of the Company s assets with a reasonable long term coal price over a fully-extended CCOW period (20 years) which the Company is confident of securing. The proposed conversion of US$1.49 billion of debt, representing 60-67% of the respective total debt owing to the relevant creditors (except for Castleford) would provide a meaningful shareholding stake which allows certain participations in the Company s operations at the board level. The current proposed equity conversion provides equitable value to all stakeholders. The shares to be issued in connection with the debt conversion have terms that meet the requirements of the OJK / IDX as well as MEMR in respect of the CCOWs and would likely obtain the necessary regulatory approval as well as necessary protection against undesired dilution or change of ownership pursuant to the Indonesian Capital Markets regulations. 10

12 Proposed Treatment of CIC/CDB s debt Basis for Revised Restructuring Proposal The proposed conversion of a significant portion of CIC / CDB Facilities into equity of private companies would exclude a significant portion of their debt to be retained as part of the New Senior Secured Facility, thereby providing a larger share to the other relevant creditors. CIC/CDB will only retain 35.9% of their principal debt outstanding as opposed to 42.3% for the other relevant creditors. These private company assets have significant risks given their existing undeveloped / dormant status of operations and expected to require substantial capital injections to develop the projects before benefitting from the potential returns. Their balance debt in excess of US$400 million to be converted into equity in Bumi represents only 23.0% of their total principal debt owing and together with the conversion into equity in private company assets represents 67% of the total principal debt outstanding. The total debt to be converted into equity is larger than the equity conversions proposed for the other secured creditors. Proposed conversion of Enercoal s Convertible Bonds into Mandatory Convertible Bonds The 100% conversion of the Convertible Bonds into 5-year Mandatory Convertible Bonds allows bondholders to accumulate interest at 6% over 5 years and have the ability to convert into equity in Bumi at a time when the debt level would be minimal, thereby benefitting from anticipated improved equity value. The proposed equity conversion at the maturity of 5 years limits the dilution of shareholding to the secured creditors portion for a 5-year period. The proposed mandatory conversion structure would effectively deem the replacement bonds as an equity instrument and reduces debt on the balance sheet, improving its capital structure. Options for Debt Conversion into equity in Private Company Assets All creditors are granted equal opportunity to convert debt into equity of selected Private Company Assets on the outset of the restructuring as well as subsequent to the restructuring based on arms-length valuations. Settlement of Overdue Trade Creditors and Management Compensation The above proposal has not taken into consideration the possible equity conversions to be proposed as settlement of outstanding debt owing to trade creditors as well as overdue management compensation. 11

13 Overview of Proposed Restructuring Terms The proposal provides equitable treatment of all secured lenders with same allocations to New Secured Facility and equity conversions, where a significant portion of CIC/CDB Facilities are converted to equity in certain private companies. The unsecured CBs and Castleford are excluded from the New Senior Secured Facility. CIC Facility US$ 1,187 million CDB Facility US$ 579 million 2016 Senior Notes & 2017 Senior Notes US$ 1,139 million Bilateral Bank Loans & Castleford US$ 669 million EnerocalConvertible Bonds US$ 410 million Total Estimated Outstanding Debts as at 31 August 2015 US$3,984 million 1 New Senior Secured Facility US$ 1,200 million Equity Conversion US$ 1,495 million CIC/CDB Facilities US$ 630 million CIC Facility US$ 150 million AXIS Bank Facility US$ 141 million EnercoalConvertible Bonds US$ 410 million 2 equal tranches of debt (excluding Convertible Bonds and Castleford) repaid within 5 years Conversion into 32.5% 2 equity stake of Bumi at implied equity valuation of US$ 4.6 billion 2 Conversion into equity in certain Private Companies within Bumi Group Conversion into Bumi equity at IDR250 per share pursuant to the CIC Transaction 3 US$100 million repaid through sale of FBS and balance debt of US$41 million to treated equally Conversion into Mandatory Convertible Bonds (MCB), convertible into Bumi s equity in 5 years 1 Outstanding debt includes estimated accrued interest up to 31 August 2015, excludes any penalty interest % is computed based on total Common Secured Facility of US$1.495 billion (including US$407 million CIC/CDB Facility and US$41 million Axis Bank Facility) against S$4.6 billion implied net equity valuation (after the conversion of CIC/CDB facilities into private company assets) This has not taken into considerationdilution from potential equity conversions of trade debts and compensation owing to management) The shares subject to this transaction were issued in the September 2014 rights issue and will be diluted following the Proposed Equity Conversion herein.

14 Impact on Common Security Creditors & Convertible Bonds All creditors are treated equitably with no preference treatment given to any party. US$1.2 billion debt remains (excluding CBs and Castleford) as the New Secured Facility split into 2 tranches of $600 million each allocated on a pro-rata basis. CIC to convert $150 million of its debt to Bumi equity pursuant to approved CIC Transaction and CIC/CDB to convert $630 million in debt into equity of certain Private Company assets with balance debts to be converted to Bumiequity whilst CBs and Castleford s debt are proposed to be fully equitised. Debt (US$ million) Principal Outstanding As At 31 Aug 2015 Estimated Debt Outstanding As At 31 Aug 2015 Repaid From Sale of Asset New Secured Facility (Tranche A) % of Principal Debt New Senior Secured Facility New Secured Facility (Tranche B) % of Principal Debt Total New Secured Facility % of Principal Debt Debts to converted to Bumi equity per CIC Transaction % of Principal Debt Debt to be converted to equity in Private Company Assets Equity Conversions % of Principal Debt Debts to be converted to Bumi Equity / MCBs % of Total Debt Total debt to be converted % of Total Debt Secured Debts CIC & CDB 1, , % % % % % % 1, % 2016 Senior Notes % % % % % 2017 Senior Notes % % % % % CS Facility % % % % % UBS Facility % % % % % Axis Bank Facility % % % % % DB Facility % % % % % RBI Facility % % % % % CS Facility % % % % % Castleford % % - Unsecured Debts - Convertible Bonds % % Total 3, , % % 1, % % % 1, % 2, % Note : The New Senior Secured Facility (after setting aside US$ 579 million for CIC/CDB) is shared proportionately based on principal debt amount owing. Interest will accrue up to Effective Date. Default and penalty interest to be waived. 13

15 Proposed Settlement Terms Creditor Total Estimated Debt Owing (US$ million) Axis Bank 141 CIC / CDB 1, Senior Notes, 2017 Senior Notes, Bilateral Bank Lenders 1,614 Convertible Bonds 410 Proposed Settlement Terms The debt owing estimated at US$ 141 million is proposed to be repaid in the following manner: US$ 100 million to be repaid with proceeds from the sale FBS, an asset that they possess a share pledge over The balance debt estimated at US$ 41 million to be repaid in the same manner as the Common Secured Debt The facilities are to be combined with debt totaling US$ billion proposed to be repaid in the following manner: US$ 150 million (8.5%) will be converted into equity in Bumibased on the terms of the approved CIC Transaction US$ 579 (32.8%) million will remain as debt in the New Senior Secured Facilities, in the same percentage as the other indebtedness US$ 630 million (35.7%) will be converted into equity in select private companies within the BumiGroup, which is currently still under negotiations US$ 407 million (23.0%) will be converted into equity in Bumibased on the same terms as the other indebtedness Basedon the above, 32.8% of the debt owing remains as debt comprised in the New Senior Secured Facility whilst 67.2% of the debt owing is proposed to be converted into equity. The total debt of US$ 2,692 million (including US$986 million of CIC/CDB Facility and US$42 million of Axis Bank Facility) US$1,200 million (42.3% of the principal debt) will remain as debt in Bumiin the form of a New Senior Secured Facility US$1,491 million (60-67% of total debt owing) will be converted into equity in Bumibased on the valuation of US$4.6 billion of Bumi. 100% of the debt owing will be converted to a 5-year Mandatory Convertible Bond, exercisable at market price with a PIK interest of 6% p.a. Castleford % of debt outstanding to be converted into to Bumi equity based on the same terms as other creditors Total 3,984 14

16 Proposed Terms of the New Senior Secured Facilities Terms and Conditions Principal Amount US$1,200million comprising pro-rata amounts of debt owing to Common Security Creditors. A breakdown of the facility for each Lender to be included are set out in the table in the previous page. The New Senior Secured Facility is to be split into 2 separate tranches with equal principal debt amount subject to the respective terms set out below. Tranche 1 Principal Amount : US$ 600 million Maturity : 5 years from Effective Date Principal Repayment : The total principal debt amount shall be repaid in full at maturity with early prepayments subject to availability of excess cash pursuant to the Cash Waterfall Principles without penalty. Interest : 6% p.a. cash interest to be paid on a quarterly basis from Effective Date. Tranche 2 Principal Amount : US$ 600 million Maturity : 5 years from Effective Date Principal Repayment: The total principal debt amount shall be repaid in full at maturity with early prepayments subject to availability of excess cash pursuant to the Cash Waterfall Principles Interest : PIK Interest of 9% p.a. paid or capitalised in accordance with Cash Waterfall principles or in full at maturity together with the final Principal Amortisation Cash Waterfall Principles 100% excess cash flow from the Coal Companies attributable to Bumi (if any) to be applied in the following priority on a monthly basis: Tranche A cash interest Overheads of Bumi of $3.0 million per month Tranche A principal prepayment Tranche B PIK interest Tranche B principal prepayment PIK Interest under Mandatory Convertible Bonds 15

17 Proposed Terms of the New Secured Facility Terms and Conditions Other Terms All default and / or penalty interest accrued up to the effective date of restructuring are to be waived. Option to convert into 55% equity in Pendopo based on a valuation of US$1.0 billion on a first-come-first-serve basis subject tothe following conditions: Conversion during Year 1 is restricted to any one creditor or creditors collectively being able to convert to the full 55% valueof equity (i.e. US$ 550 million in debt must be converted) and such conversion is to occur only once during the year. Conversion from Year 2 onwards (if Year 1 conversion does not occur) is available to any creditor on a pro-rata basis, subject to certain minimum thresholds to be agreed upon The Company proposes to acquire the balance 15.3% equity in Pendopo with shares to be issued by Bumi. All outstanding principal debt and interest under both tranches shall be fully repayable by the Maturity Date, for which the Company is permitted to undertake a fund raising or refinancing exercise. In the event that the coal price continues to deteriorate and the Company fails to generate sufficient free cash flow to meetdebt obligations, any unpaid interest shall be rolled over and becomes due and payable in the next Cash Waterfall subject to availability of excess cash. If the coal prices do not improve as expected and as a result, the Company is unable to meet its debt repayment obligations at maturity, the Company is granted a grace period of 6 months to raise additional capital and/or refinancing to meet such debt obligations. Governance Rights An independent cash monitoring accountant to be appointed to report to the Common Security Creditors on cash receipts and utilisation by Bumi on a quarterly basis. This cash monitoring role can be maintained until both tranches of the New Senior Secured Facilityare fully repaid. 16

18 Proposed Terms of the Debt to Equity Conversions Terms and Conditions CIC/CDB Equitisation US$150million in debt equitising at IDR250/share for 18.8% of the common equity in Bumi (to be diluted by conversion of the balancedebt pursuant to the terms below). US$630 million in debt to be converted into equity of select private assets within the Group, not part of the Common Security. Convertible Bonds Conversion Conversion of Common Secured Facilities intobumi Equity Share Issue Structure & Rights Convertible Bonds to be converted into Mandatory Convertible Bonds on the following terms: Mandatory conversion into Bumi equity in 5 years PIK Coupon of 6% per annum to be accrued for 5 years Conversion price based on the market value of shares at conversion Balance debt of US$1,495million (including accrued and unpaid interest up to 31 August 2015 to be converted into 32.5%* equity of Bumi based on an Implied net equity valuation of US$4.6 billion Alternatively, the creditors have option to elect to convert its debt into the select private assets of the Group based on the same valuations accepted by CIC/CDB. Non-preemptive rights issue will be undertaken to effectuate the conversion into Bumi shares based on prevailing capital markets regulations A trustee to be appointed to hold the shares on their behalf and in accordance with the Common Security Creditors instructions Common Security Creditors hold the right to collectively nominate one representative each on the Board of Directors and the Board of Commissioners of Bumi. Such rights terminate as and when the collective converted shareholding held by the Common Security Creditors pursuant to this restructuring proposal is reduced below 20%. Management Obligations Conditions Precedent To release comprehensive quarterly updates via public investor presentations outlining mine-level operating performance, KPIs and financials Public release of comprehensive update presentation on current operations and mine-level performance Reimbursement/payment of advisor fees on closing as may be agreed. Note: * The proposed 32.4% equity conversion has not taken into consideration the dilution from potential equity conversions of trade debts and overdue management compensation 17

19 Benefits to All Stakeholders The appropriate debt level would enable the Company to sustain its operations over the long term without the risks of defaulting on payment as a result of unexpected coal price decline which is beyond the control of the Company. The revised capital structure will allow opportunities in the medium term for the Company to undertake fund raising activities to finance its operational initiatives and/or to pay down debt in a shorter timeframe than expected. The deleveraging of debt resulting from conversion into equity would be value accretive to Bumi s equity and may potentially provide higher return to the creditors The conversion into shares of Bumi, which are publicly traded without any lock-up period would provide creditors with a potentially quicker exit than debt repayments over extended maturities. Creditors would be granted full shareholders rights from the equity conversion that enables creditors to participate in the business on the boards with normal voting rights, thereby accreting full market value for the shares as well as ability to dispose en-block via the Trustee provides opportunities to dispose at premium considering the substantial collective stake. The proposed governance rights under the New Senior Secured Facility provide creditors the appropriate transparency and control over Bumi s cash position and utilisation. The alternative option of a bankruptcy of Bumi would likely result in a loss of the CCOWs currently held and consequently, little or no recovery to the creditors, let alone any value to be returned to the shareholders. This would be undesired outcome to both lenders and shareholders. 18

20 4. Update on Company s Performance

21 Coal Companies Performance for 1 st Half 2015 Q1-15 Q2-15 1H-15 1H-14 Var (%) KPC Overburden mbcm % Strip ratio bcm/tmined % Coal Mined mt % Coal Production mt % Coal Sales mt % FOB Price $/t % Inventory mt % ARUTMIN Overburden mbcm % Strip ratio bcm/tmined % Coal Mined mt % Coal Production mt % Coal Sales mt % FOB Price $/t % Inventory mt % COMBINED Overburden mbcm % Strip Ratio bcm/tmined % Coal Mined mt % Coal Production mt % Coal Sales mt % FOB Prices* $/t % Coal Inventory mt % 20

22 5. Next Steps & Estimated Timeline

23 Targeted Restructuring Timetable Action Steps Target Deadline Presentation of Revised Restructuring Proposal by Bumi to all creditors in an all-creditors meeting 28 September 2015 Seek feedback and convenesubsequentmeetings to discuss the Revised Restructuring Proposal with individual creditor constituencies or on a collective basis to reach agreement on the terms 15 October 2015 Preparation andnegotiations on legal documentationbased on the terms to be agreed with the creditors and entry into restructuring agreements with creditors 22 October 2015 Submissionof application to Singapore High Court for a scheme of arrangements and/or for alternative / secondary proceedings in other jurisdictions, whichever appropriate, for implementation purposes* As and when restructuring terms are agreed to with all parties Hold Section 210 scheme meetings and/ormeetings to seek formal creditors approvals under other appropriate proceedings to approve the Scheme of Arrangement or the restructuring proposal as appropriate. Subject to the above timeline Submit application to Singapore HighCourt and/or courts in other jurisdictions, as appropriate,to sanction the approved Scheme of Arrangement or relevant restructuring plan 1-2 weeksafter requisite creditors consents are obtained Note : * For implementation purposes, the Company is considering an application for a Suspension of Debt Payment Obligations / PenundaanKewajipanPembayaraanUtang( PKPU ) proceeding in Indonesia upon reaching agreements on the restructuring terms with the respective creditor groups. 22

24 Critical Thinking at the Critical Time