UPDATE 1-Shareholders of Indonesia's Bumi approve crucial CIC debt deal

By Fathiyah Dahrul and Eveline Danubrata

JAKARTA, Jan 10 (Reuters) - Shareholders of Indonesia's Bumi Resources BUMI.JK , Asia's biggest thermal coal exporter, approved on Friday a crucial $1.3 billion debt-for-equity swap deal with China's sovereign wealth fund, CIC CIC.UL , despite the absence of a key shareholder.

Only one-third of shareholders had to approve the deal after the Indonesian company delayed a previous vote from Dec. 20.

"I hope the deal will be final before Chinese New Year, this month," said Andrew Beckham, a director at Bumi Resources.

A collapse of the Chinese deal would have been disastrous for Bumi Resources, which has suffered downgrades from ratings agencies and faces bloated debt even as coal prices remain soft.

Asia Resource Minerals ARMS.L , the London-listed company previously known as Bumi Plc and which owns 29 percent of Bumi Resources, said late on Thursday it would not attend the Indonesian company's shareholder meeting on Friday.

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Under the proposed deal, CIC will convert the $1.3 billion owed to it by Bumi Resources into a 19 percent stake in PT Kaltim Prima Coal, 42 percent in Bumi Resources Minerals

BRMS.JK and around 18 percent in Bumi Resources.

The transaction would cut Bumi Resources' total debt by 30 percent to $3.4 billion from $4.9 billion as of September last year, according to a company presentation in December.

Termed as the "complete solution to most expensive debt in the company's capital structure", the transaction would also lead to a "material reduction" in annual interest costs and an improvement in the company's free cash flow, Bumi said.

"If it goes through it's good for everybody. If it doesn't go through it's bad for everybody," said S&P analyst Vishal Kulkarni before the vote.

He said the deal is key to cutting Bumi Resources' debt service costs and if it had not gone through or even been delayed by three months, Bumi Resources would have had to line up another source of funding or find a way to sell some assets.

Bumi Resources bonds were trading close to 70 cents on the dollar with the 2016s < 120468AA1= > yielding 28.9 percent and the 2017 120469AA9= 24.1 percent. Both have rallied from last August's low of 53 cents.

For graphic on Bumi bond prices recovery correlated with rebound in coal prices: http://r.reuters.com/zyq85v.

(Additional reporting by Sonali Paul in MELBOURNE and Umesh Desai in HONG KONG; Editing by Matt Driskill)

((eveline.danubrata@thomsonreuters.com)(+62 21 3199 7170)(Reuters Messaging: eveline.danubrata.thomsonreuters.com@reuters.net))

Keywords: BUMIRESOURCES VOTE/