Govt, Kideco agree on divestment price

Government and East Kalimantan coalminer PT. Kideco Jaya Agung had agreed to value the latter?s 100 percent shares at US$365 million as a basis for the company?s divestment offer, a government source said Thursday.

The value was lower than $389 million the company earlier proposed.

The source said Kideco is ordered to immediately offer 41 percent of its shares it obliged to divest to Indonesian entities, including to central government and East Kalimantan provincial administration and Pasir regency administration.

Under the coal contract of work (CCoW), Kideco is obliged to gradually divest at least 51 percent of its shares to Indonesian government or Indonesian business entities after ten years of commercial operations.

Kideco has thus far managed to sell 10 percent of its shares to two Indonesian companies; PT. Sumber Mitra Jaya and PT.Muji Inti Utama, a company affiliated with coalminer PT. Gunung Bayan Pratama. Each company bought 5 percent shares.

The source said Kideco is ordered to carry on with divestment program despite ongoing lawsuit filed by Pasir regency administration against Kideco shareholders. The regency demanded the court to order the company to pay compensation in excess of US$300 million, and insisted that the court annul the sale of 10 percent of Kideco?s shares.

The source, however, did not say when the divestment process is expected to be completed.

Kideco, one of Indonesia?s top coal producers, is a subsidiary of South Korean company Sam Tan Corp. (godang)