KPC may divest shares through IPO

The government may ask coal mine operator PT Kaltim Prima Coal (KPC) to carry out its mandatory divestment plan through initial public offering (IPO) if the company fails to carry out the plan through the ongoing private placement, Bisnis Indonesia daily reported on Thursday.

Sources said that the government and KPC were currently discussing the deadline of the private placement. "If the divestment through private placement fails, the management of the coal producer will be asked to divest the IPO.

They said that the sales of KPC?s shares to the public through IPO would be fairer and more transparent because all parties would be allowed to buy the shares.

KPC, which operates a large coal mining area in East Kalimantan, is equally owned by world mining giants Rio Tinto and BP. Under its contracts of works, the company?s shareholders are required to divest 51 percent of their shares to local investors.

The mandatory divestment program has been delayed for at least three years due to a dispute over the percentage of the shares that must be sold to the central and local government. According to the latest compromise, 31 percent of the 51 percent of KPC shares would be sold to the provincial administration and another 20 percent to state owned coal operator PT Tambang Batubara Bukit Asam.

The bidders had been given six months to carry out the transactions but they failed to do so. The government then asked the management of KPC to extend the offering period of the East Kalimantan-based coal producer?s 51 percent shares to another six months to give the appointed buyers more time to carry out due diligence audit on the coal producer. (*)