Bumi scraps planned merger with Energi Mega Persada
Tuesday, November 14 2006 - 09:37 AM WIB
Coal mining company PT Bumi Resources has scrapped plans to merge with oil and gas company PT Energi Mega Persada as the latter has yet to struggle to stop the months-long mudflow gushed from its exploration well in East Java.
Bumi?s president Ari S. Hudaya said Bumi had decided to scrap the merger because ?uncertainty over Lapindo?s divestment and disagreement over the value of each company,? Bumi?s president Ari S. Hudaya told Petromindo.Com on Tuesday, referring to PT Lapindo Brantas, the subsidiary of Energi Mega Persada, that operates the well gushing the mudflow.
A merger between the two companies that are linked to the family of Coordinating Minister of Public Welfare Aburizal Bakrie would have created the country?s largest publicly traded company.
In an effort to smooth the merger, Energi Mega Persada sought to divest Lapindo Brantas but the country?s stock market authority Bapepam disapproved the effort.
The Lapindo mudflow has inundated houses, roads and businesses in East Java, making tens of thousands of people homeless and hurt the economy of the province. Energi Mega has spent a lot of money to compensate people affected by the mudflow and is expected to pay more as the efforts to stop the mudflow has thus far brought no fruits and none dares to predict when the mudflow will stop.
Bumi earlier planned to sell all its coal assets to raise funds to develop Energi Mega?s natural gas resources. But, the effort has fallen through because the potential buyer failed to generate funds to purchase the coal mines.
On Monday, Bumi announced its plan to sell 30 percent stake in its coal units PT Arutmin Indonesia and PT Kaltim Prima Coal. (Godang)