Bapepam insists Bumi stock trading suspension to continue

The Capital Market Supervisory Board (Bapepam) insisted PT Bumi Resources stock trading should be suspended as the board deemed public expose conducted by Bumi last week did not provide satisfactory explanation on the sale and purchase agreement (SPA) in the acquisition of overseas holding companies which own coal mining firm PT Kaltim Prima Coal.

"We deem the public expose carried out by the management of Bumi Resources last Friday has yet to disclose details information on the term and condition of SPA to the public," Herwidayatmo, the head of Bapepam said as quoted by Bisnis Indonesia on Monday.

If necessary, Bumi management should disclose the SPA to the public in media on details of the agreement with energy giant BP PLc and Anglo-Australian mining firm Rio Tinto.

Herwidayatmo said Bapepam and the Jakarta Stock Exchange will submit official request to the management of Bumi to provide necessary information to the public.

"The letter will be signed by the head of Bapepam," Herwidayatmo said.

He asserted the acquisition transaction must be done according to Bapepam regulation No. IX E.2. on material transaction. However, since Bumi management has disclosed an agreement with BP PLc and Rio Tinto, then the company must provide the public on the development of the agreement.

It is important not to build public perception that the plan is set to materialize, Herwidayatmo asserted.

"If everything is yet to be confirmed, then Bumi must explain the term and condition that should be fulfilled in the agreement. Thus, public can be protected and do not deem that Bumi will eventually get the shares of Sangatta and Kalimantan Coal so that they are willing to buy Bumi shares at any price. This what we are trying to prevent," he explained.

On top of that, Bumi must explain financing sources it would use to acquire 100 percent of shares belonging to Sangatta Holding and Kalimantan Coal.

As widely reported, the issue surrounding the sale of 100 percent share of overseas holding companies - Sangatta and Kalimantan Coal-by Anglo-American energy firm BP PLc and coal mining firm Rio Tinto to local mining firm Bumi Resources.

The holding companies own 100 percent of shares in PT Kaltim Prima Coal that operates a coal mining in Sangatta, East Kalimantan. The sales sent a shockwave as it was done as the government struggled to solve disputed divestment of 51 percent of KPC's share.

Under a coal agreement signed by KPC with the central government in 1982, the company must sell its 51 percent shares after 10 years of operation.

It should have been done in 1996 but delayed up until now as KPC involved in a lengthy dispute with the local East Kalimantan government who insisted that the shares should go to them as the host of the mining site.

Last year, the government had decided 31 percent should go to a company or consortium appointed by the East Kalimantan government while the remaining 20 percent went to state coal mining firm PT Tambang Batubara Bukit Asam.(*)