Govt approves KPC’s share sale to E.Kutai, orders KPC to commence new offer
Tuesday, April 6 2004 - 01:51 AM WIB
The government has also ordered KPC to open new offer to sell the remaining 32.4 percent shares to be divested as required under the coal contract of work (CcoW).
“The government had approved the share sale (to East Kutai regency administration). Government had also ordered KPC to close the current divestment offer and commence with new offer in accordance with CCoW, which means it will be open to all Indonesian-owned business entities,” said Simon Felix Sembiring, director general of geology and mineral resources at the ministry of energy and mineral resources.
The decision is a severe blow for East Kalimantan provincial administration, which, with the back up of tycoon David Salim, had been fighting for years to be able to control KPC.
In 2002, the government and KPC shareholders agreed to value 100 percent shares in KPC for US$822 million. East Kalimantan provincial government had insisted that its subsidiary PT Melati Bhakti Satya be given preferential right to acquire the whole 51 percent shares of KPC. But then KPC shareholders; Rio Tinto Plc. and BP Plc. vehemently fought against the plan. Central government finally decided that 31 percent of KPC shares would go to East Kalimantan provincial administration and East Kutai regency administration and another 20 percent to state coal miner PT Tambang Batubara Bukit Asam (PTBA).
PTBA later refused to take up its 20 percent portion and East Kalimantan provincial government had not given clear stance whether it would accept central government’s decision.
In the middle of the deadlock, PT Bumi Resources Tbk, which is controlled by the Bakrie family entered the stage last year by buying KPC’s 100 percent shares for US$500 million, far lower than US$822 million price benchmark earlier agreed between KPC and the government.
The government then said that despite acquisition by Indonesian company, KPC’s divestment obligation remained, since Bumi is only indirect owner of KPC. Bumi controlled KPC through acquisition of Sangatta holdings Limited, an offshore paper company owned by Rio Tinto and Kalimantan Coal Limited, also a paper company, owned by BP.
Early this year, KPC announced that it had reached agreement to sell 18.6 percent of its shares to East Kutai regency administration for US$104 million. But thus far, Kutai had not made any payment to KPC.
Another government official said KPC and government would soon commence negotiation to decide on KPC’s valuation price. The official said KPC is expected to commence its offer “within the next few months”.
KPC operates a giant coalmine in East Kutai regency, East Kalimantan. The company plans to produce 26 million tons of coal this year. (alex/godang)