Kideco proceeds with share divestment process

East Kalimantan coal mining firm PT.Kideco Jaya Agung said it had commenced process to divest its shares as stipulated in Coal Contract of Work (CCoW) by offering shares to Indonesian-owned entities.

?Kideco?s financial advisor BNP Paribas had sent letter to offer Kideco?s 41 percent shares to 19 entities; including central government, East Kalimantan provincial government, Pasir regency administration and existing Indonesian shareholders,? said managing director Kim Sung Kook in an interview with Petromindo.Com.

Under the CCoW, Kideco is required to gradually divest 51 percent of its shares to Indonesian owned after 10 years of commercial production. Kideco had 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 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.

The Ministry of energy and Mineral Resources, which represent central government, had ordered Kideco to proceed with divestment after the government and Kideco had agreed on a $365 million valuation of the entire shares of the company.

?Legally, Kideco has no obstacle to proceed with divestment,? said Kim.

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)