Offering period for KPC?s shares will be extended

The government and the management of PT Kaltim Prima Coal (KPC) have agreed to extend the offering period for the sale of the coal producer?s 31 percent shares to the East Kalimantan provincial administration in order to give the latter more time to find reliable partners in the takeover plan, Bisnis Indonesia reported on Thursday.

The chairman of the government?s team for the divestment of KPC shares, Djoko Darmono said in Jakarta on Wednesday that the extension of the offering period was needed to give the local administration more time to find partners in buying the shares.

"The extension of the offering period is necessary to ensure there is no more conflicts in the company?s divestment program," he told the daily.

He said that the sale of the company?s another 20 percent shares was on schedule.

"We will decide tomorrow (today) which of the two companies to buy KPC?s 20 percent shares, but I personally prefer to choose PT Batubara Bukit Asam." Minister Laksamana said following a meeting with Energy and Mineral Resources Minister Purnomo Yusgiantoro.

According to Laksamana if PT Antam is named, it would take time because as a public company it should require approval from shareholders to carry out the share purchase.

State owned coal mine operator PT Batubara Bukit Asam and state owned general mine operator PT Antam have passed the qualification test to buy the shares but the State Minister for the Supervision of State Owned Enterprises Laksamana Sukardi has not decided which of the two companies that would be named to buy the shares.

Sources said that the two state-owned companies are not so excited with the purchase because they feel the price of the shares is still too expensive. The 51 percent share is worth US$419 million or US$8.2 per share.

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. The local administration had demanded to buy all of the 51 percent stake.

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 the central government. The East Kalimantan administration should find a business partner to buy the 31 percent, while the 20 percent which have been allocated to the central government would be sold to state companies. (*)