Kideco fails to attract bidder, divestment deadline extended

East Kalimantan coal producer PT Kideco Jaya Agung has been granted a two-week extension until April 15 to complete a 41 percent stake divestment obligation after the initial deadline had been passed, a source said.

The source said none of the five companies which among others include state tin miner PT Timah that have earlier expressed interest to purchase Kideco’s 41 percent shares submitted bid by the 31st March deadline.

The source said Kideco is currently in talks with a company to sell its shares. “That’s why Kideco is asking for the extension,” said the source. Kideco’s senior official Ali Patan when contacted by Petromindo.Com Thursday declined to comment on the matter.

The source went on to say that the main reason potential investors declined to submit bid is that they consider the price was too expensive. “The valuation price is US$ 365 million for the company’s 100 percent shares, or around $150 million for 41 percent stake. Investors are not willing to spend that much money without controlling interest,” said the source.

Under the Coal Contract of Work (CCoW), Kideco is required to gradually divest up to 51 percent of its shares to Indonesian owned companies after 10 years of commercial production. Kideco had earlier managed to sell 10 percent shares to two Indonesian companies namely PT Sumber Mitra Jaya and PT Muji Inti Utama, which got 5 percent each.

The source said if the divestment fails to materialize, Kideco and the government would negotiate a new valuation price for the company. “New valuation would be higher than $365 as coal prices and Kideco’s profitability are on the increasing mode. That would make divestment even more difficult,” said the source.

Kideco operates a huge coalmine in Pasir regency, East Kalimantan, with production capacity of 15 million tons per annum. Kideco is a subsidiary of South Korea’s Sam Tan Corp. (alex/godang)