Australia?s HWE to sell Indonesian unit to Bumi Resources

Australian company Henry Walker Eltin Limited (HWE) said Tuesday it had secured an agreement for the sale of PT HWE Indonesia (formerly PT Darma Henwa) to a group co-ordinated by Indonesia?s largest coal producer PT Bumi Resources.

In May last year, HWE won a US$1.2 billion mining contract at Bumi?s subsidiary PT Kaltim Prima Coal, the Bengalon coal project, in East Kalimantan. HWE said earlier the contract would require plant and equipments worth $120 million for the initial coal output target of 6 million tons per annum.

HWE won the deal without financing in place, leaving the Australian company insolvent on a cash basis. HWE was forced to place itself into administration Jan. 31 after Swiss commodities house Glencore Finance AG pulled a A$100 million refinancing deal.

?The timing of the decision reflected the immediate and significant ongoing financial commitment required, in particular substantial further cash funding for infrastructure works, working capital, wages and plant and equipment in the order of US$110 million,? HWE said in a statement to the Australian Stock Exchange Tuesday.

HWE added those funds required immediate commitment to maintain value in the Bengalon project.

?The financial arrangements (that is, funds received to exit the venture) at present remain confidential, but the sale results in the immediate assumption of all HWE?s liabilities by PT Bumi Resources, significantly reducing the overall claims against the HWE Group,? HWE said. (Robert)