Bumi to sell KPC, Arutmin for $3 billion

The country?s largest coal producer and exporter, PT Bumi Resources, appears on the verge of clinching a deal to sell its entire stakes in two coal-mining firms, PT Kaltim Prima Coal and PT Arutmin, to a consortium of foreign and local companies, including U.S.based Farallon Capital Investment and local company PT Renaisance Capital, an inside source said Thursday, The Jakarta Post reported on Friday.

?The preliminary agreement on the transaction, for a price of almost US$3 billion, will be signed tonight,? the source told The Jakarta Post.

He added, however, that the deal would not be concluded until June, after it had been endorsed by the company?s shareholders, who are also due to meet that month.

Bumi, which is controlled by the family of Aburizal Bakrie, the coordinating minister for the people?s welfare, owns almost 95 percent of KPC, and an 80 percent stake in Arutmin.

The sale of the stakes in the two companies will be the second largest divestment ever conducted by a local company, following the record set by the Sampoerna family when it sold its entire stake in cigarette producer PT H.M. Sampoerna last year for US$5.2 billion.

Ari Hudaya, Bumi?s president, could not be reached for comment, but he earlier told Dow Jones that the company?s management was in talks with local buyers to sell the company?s entire stake in both KPC and Arutmin.

?We have a big plan, which we will reveal after the sale is completed,? he said.

The source told the Post that the divestment of Bumi?s shares in the two coal miners was part of a major expansion plan by the company into the oil and gas business.

He said that after the two stakes had been sold, Bumi would acquire oil and gas firm PT Energi Mega Persada, which is also partly owned by the Bakrie family.

?Bumi will expand its business into oil and gas through PT Energi Mega Persada, which at present operates eight oil and gas blocks in Indonesia and two others in Yemen,? he said.

In addition, Bumi would add value to its coal output by processing it into liquid, he said, adding that the company would collaborate with South Africa-based firm SOAL in the production of ?liquefied coal?.

Bumi?s shares surged Rp 50 or 5.4 percent, to Rp 980, their highest level ever, on news of the divestment plan. More than 326 million Bumi shares were traded, the highest number since March 31, 2005, when 364.1 million Bumi shares changed hands.(*)