A study by a securities company shows that PT Bumi Resources a major coal exporter in Asia was headed towards financial bankruptcy.

Ms Fajar Indra an equity analyst for the metal and mining sector at Panin Securitas stated in Panin study said "It can be concluded that BUMI is in the danger zone or headed towards financial bankruptcy."

Ms Fajar based the analysis on calculations which determine the financial well-being of a company. In this calculation, Bumi scored 0.9 points, far beneath the score that indicates financial trouble at 1.1 points.

Besides the calculations, Mr Fajar also pointed out that Bumi has just lengthened the time period of its fund investments worth USD 231 million at PT Recapital Asset Management. He said that "In other words, BUMI has failed to liquefy its investments to conduct refinancing."

He added that Bumi debt to China Investment Corporation totalling USD 1.3 billion. He also said "The profit margins have also been eroded due to the 9.2% jump in production costs by the ton which has not been balanced by a rise in sale prices."

In their financial report from the first half of the year, Bumi revealed that they have racked up financial losses of USD 334.1 million or a loss of USD 15.87 per share.

Source - Jakarta Post

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