Press release: Higher price expected as KPC moves to offer 51% in 2001
Tuesday, May 15 2001 - 01:00 PM WIB
KPC has today advised the Minister of Energy and Mineral Resources that it is prepared to offer 51% of its shares for sale in 2001, in accordance with the Coal Agreement as per the request made by the Minister in April 2001.
The 2001 offers now can be made as soon as the price is determined. KPC expects a significantly higher price to be set for this year's offer. The company has reduced its debt by US$150 million and coal prices have risen some 20% since the last independent valuation. Both of these factors have a major influence on KPC's increased value.
KPC does not set the price for the shares. To ensure that the price is fair to both the buyer and to KPC, the process for determining the price of the shares is prescribed in the Coal Agreement. If the price can not be agreed between the Government and KPC, Independent Valuers are appointed and they determine what the price should be. This process is carried out each year, to ensure that the valuation remains current and fair.
Under the terms of its Coal Agreement KPC is required to offer shares for sale to Indonesian participants. It has previously made offers of its shares in 1998, 1999 and 2000 in accordance with the revised schedule agreed with the Department of Mines and Energy in 1998. That agreed schedule indicates an obligation to offer 44% in 2001.
However, despite the previous agreement, there have been continued requests, over the last 6 months, that KPC revert to the divestment schedule as originally set out in the Coal Agreement and offer 51% of its shares in 2001. Lately there have been many media reports on the issue.
The shareholders of KPC, BP and Rio Tinto are both substantial and long term investors in Indonesia. They believe that to continue the debate over the percentage to be offered is not helpful and will only undermine the confidence of investors and international agencies in Indonesia. That is not in the best interests of Indonesia nor KPC. Hence KPC is taking the step of offering 51% for divestment this year. The company is now looking to move the divestment process forward.
Contact: Lex Graefe - Rio Tinto OR Peter Vider - BP International, Phone: (021) 527 4208, Phone: 44 207 579 7886, Fax: (021) 527 4230, Fax: 44 207 579 7884. (*)