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Singapore, June 14, 2011 -- Moody's Investors Service sees no immediate impact on Bumi Resources Tbk's ("Bumi") Ba3 corporate family rating and Bumi Investment Pte Ltd's Ba3 senior secured notes rating from the proposed sale of a 75% stake in Bumi Resources Minerals Tbk ("BRM") to Vallar PLC ("Vallar"), which will issue approximately US$2.1billion of convertible bonds to Bumi as consideration. The transfer is expected to be completed in 3Q 2011. The outlook of the ratings remains stable. "The disposal of a majority stake in BRM streamlines Bumi's operational structure and allows it to fully concentrate on its coal operations in Indonesia. It also reduces Bumi's exposure to the execution, political and expropriation risks pertaining to BRM's exploration and development projects in high risk jurisdictions," says Alan Greene, a Moody's Vice President and Senior Credit Officer. >From a cash flow perspective, Moody's does not expect any material impact arising from the proposed sale as BRM previously raised funds for its development independently without any recourse to Bumi. After the completion of the transaction, BRM's debt will be excluded from Bumi's adjusted financial metrics, but the overall improvement in leverage will not be significant given the size of Bumi's total debt. Moody's is also cognizant of the 2% coupon on the convertible bond. Vallar is expected to fund the semi-annual payments via cash flow from Bumi and Berau Coal, a 75%-owned subsidiary of Vallar, as it is an investment holding company with no operational cash flow. "The proposed sale also provides Bumi with an additional financial instrument that may potentially be monetized and/or used to reduce its substantial debt leverage. However, the ability to reduce its debt is subject to the timely agreement of the counterparties. Meanwhile, the value of the Vallar convertible bond will be exposed to market pricing risk," adds Greene, also Moody's Backup Analyst for Bumi. Vallar owns 25% of Bumi through a share swap with the Bakrie Group in March 2011. Vallar intends to increase its stake in Bumi up to 50% and obtains control during 2011 via a further share swap with willing Bumi shareholders. BRM holds interest in iron ore, zinc, lead, phosphate, diamond, and gold concessions located in Indonesia and Africa. Most of its projects are currently at the feasibility study/ exploration stage and are likely to require substantial investments to bring them to production stage over the medium-to-long term. It is listed on the Indonesia Stock Exchange since December 2010 and is expected to maintain its listing after the transaction between Bumi and Vallar. Bumi's current shareholding in BRM is 87.09%.