Delta to acquire Berau Coal in $1.1b deal

IDX-listed mining contractor PT Dekta Dunia Makmur Tbk (Delta) reported on that on Tuesday it has signed a non-binding term sheet with Recapital Investment Group to acquire majority shares at PT Berau Coal Energy (BCE).

Recapital will give up shares at BCE in return for substantial amount of shares at Delta, the Company said.

BCE is indirect owner of 90 percent shares of East Kalimantan coal mining firm PT Berau Coal (BC), which is the country?s number five coal producer with 2009 production of 14.3 million tones.

This transaction will create a leading integrated coal mining business in Indonesia which will see its mining contractor unit PT Bukit Makmur Mandiri Utama (BUMA) to get bigger and longer contract from BC, the Company said. BUMA, the country?s second biggest mining contractor in terms of volume, is currently the biggest mining contractor in BC.

Transaction will be carried out through purchase by Delta on Mandatory Exchangeable Bond (MEB) which will be issued by company related to Recapital which can be converted into shares of BEC, expected around April 2011 based on BEC IPO valuation.

Delta plans to finance the acquisition through right issue at Rp.1, 400 (US$ 15 cents) per share to raise $1.1 billion. Based on the term sheet, Recapital will acquire substantial shares of Delta and will act as stand by buyer for the right issue.

Both parties will work together to conduct due diligence and negotiating to achieve definitive agreement on MEB issuance, the Company said.(denny)