KPC will likely increase the price of its shares
Wednesday, May 12 2004 - 03:37 AM WIB
Martinus Peter T, the head of investors relations of PT Bumi Resources, the majority shareholder of KPC, said that the value of KPC?s shares should be higher than those fixed two years ago when former KPC owners planned to divest majority stake in the company.
He said that surge in the price of coal in the international market should also bring an added value to the company?s shares. But he said that KPC?s management had not yet made a final decision on the price of the shares that should win approval from the government before being implemented.
Former KPC?s shareholders Rio Tinto and BP were required to divest up to 51 percent of its stake in the coal producer two years ago as part of the mandatory divestment requirement stated in the company?s contract of work. The price of the entire shares was fixed at US$822 million at the time. It meant that the price of the 51 percent shares that would be divested, reached US$419 million.
The divestment however could not be carried out as expected because the East Kalimantan provincial administration insisted to buy all of the 51 percent shares, which are worth US$419 million. Besides this problem, the high price demanded by Rio Tinto and BP had caused a delay in the divestment.
Surprisingly, when the negotiations to break the deadlock were still going on, Rio Tinto and BP instead sold their entire stake in the coal producer to Bumi Resources, which later said that it would continue the divestment plan. However, the new owner was only able to sell 18.6 percent to the East Kutai?s regency administration. The government has insisted KPC to sell the remaining 32.4 percent of its shares in 2004.
Mahyuddin Lubis, the director of minerals and coal at the ministry of energy and mineral resources, said on Tuesday that KPC should submit the new price before the end of June at the latest.
The new price should be based on the current coal prices and their prospects for another 10 years in addition to the country risk, he added. (*)