East Kutai wants to reschedule payment for KPC shares

The local government of East Kutai regency in East Kalimantan has asked for a rescheduling of the payment for a 18 percent stake in PT Kaltim Prima Coal (KPC) due to the lack of funds, Bisnis Indonesia reported on Tuesday.

The regent of East Kutai, Mahyudin, said that he would soon formally ask PT Bumi Resources, the owner of KPC, to amend the existing sales and purchasing agreement (SPA) for the KPC shares.

“We want Bumi Resources to extend the deadline for the payment of the KPC shares,” he said.

He noted that the East Kutai regency actually still had time until June to pay the KPC shares but it faced difficulties to realize the payment due to the issuance of a central government regulation which prohibits a local government to raise funds from international financial institutions.

“Earlier, we had received a commitment from International Forex Financing Group Ltd and local bank Bukopin to provide the acquisition funds,” he added. “International Forex Financing, for example, was ready to give loan amounting to US$25 million with interest rate of 8 percent a year,” he added.

Bumi Resources, the sole owner of KPC, agreed last year to sell its 18.6 percent stake in KPC as part of the mandatory divestment imposed on former shareholders Rio Tinto and BP. (*)