Bumi Resources to issue $500m bonds to take over KPC
Thursday, July 24 2003 - 03:43 AM WIB
Chief Commissioner of PT Bumi Resources, Suryo B. Sulisto, said in Jakarta on Wednesday that the energy-based company had appointed Credit Suisse First Boston and Overseas Union Bank of Singapore as the lead arrangers of the bond issuance.
Suryo said that Bumi Resources would use KPC?s assets as collaterals to secure the US$500 bond. ?We will use KPC?s production as the collateral instead of PT Arutmin?s,? he added.
Bumi Resources which also owns 80 percent interest in PT Arutmin, another coal producer based in Kalimantan, said that the initial plan to issue bonds worth US$300 million to raise funds for the refinancing of Arutmin?s long-term loan would continue despite the plan to issue the US$500 million bonds for taking over KPC.
?The plan to issue US$300 million for Arutmin will go as schedule and it has nothing to do with the acquisition of KPC shares,? he said.
Bumi Resources? move to take over the whole stake of KPC had surprised the country?s mining community. KPC which is equally owned by Rio Tinto and BP is required by law to divest up to 51 percent of its shares to local shareholders through the ministry of energy and mineral resources. According to the mandatory divestment requirement, the divestment of the 51 percent should have been completed by 2001 but it was delayed due to difference in prices.
After several delays, the ministry of energy and mineral resources named last year two companies wholly owned by the provincial government of East Kalimantan to purchase 31 percent of KPC shares in the divestment program and another 20 percent to state owned coal mining company PT Batu Bara Bukit Asam (PTBA). The negotiations on the divestment, however, has been stalled due to differences in prices.
Suryo said that the divestment of the 51 percent would continue as scheduled despite the take over of KPC?s 50 percent by Bumi Resources. ?The divestment will continue but we have to renegotiate the pricing of the shares,? he said.
The East Kalimantan provincial administration felt of being stabbed from behind with the sales of KPC?s shares to Bumi Resources. Legal consultant of the East Kalimantan government, P.D.D Dermawan said that the sales of the 100 percent shares of Rio Tinto and BP in KPC to Bumi Resources were legally strange. ?What is the difference of selling their shares to Bumi Resources and to East Kalimantan government,? he said.
He said the East Kalimantan government would continue to buy the 31 percent of the 51 percent of KPC shares that have been allocated by the central government to the province and PT Bukit Asam. (*)