Kideco ordered to offer shares before year-end

The government has ordered East Kalimantan-based coalminer PT. Kideco Jaya Agung to offer 41 percent of its shares to Indonesian investors before the end of this year, Geology and Mineral Resources Director General Wimpy S. Tjetjep said.

“I have sent a letter to Kideco on this matter,” Wimpy told reporters Wednesday.

Kideco’s coal contract of work obliges it to divest at least 51 percent of its shares to Indonesian investors, including Indonesians-controlled firms, state enterprises, the government after ten years of commercial production. The firm operates a coalmine in Pasir regency, East Kalimantan.

Kideco has sold 10 percent of its shares to two Indonesian companies namely PT. Sumber Mitra Jaya and PT. Muji Inti Utama, which got 5 percent each.

The government and Kideco had agreed on a $365 million valuation of the entire shares of the company.

The divestment of the 41 percent stake in Kideco had been delayed due to the prolonged legal battle between the company and the East Kalimantan provincial administration and Pasir regency administration.

They demanded the firm to compensate them for the selling of the 10 percent shares, arguing that Kideco should have offered the shares to them. Pasir administration demanded an East Kalimantan 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. Kideco shareholders refused to meet their demand.

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