PSL Holdings completes acquisition of Jambi coal miner

By Romel S. Gurky

Singapore-listed civil engineering service firm PSL Holdings Limited recently announced that the acquisition of the BMS Shares by subsidiary Sindo Resources has been completed as of 18 May 2012.

Previously agreed to extend an exchangeable loan for the purpose of funding the acquisition of PT. Bubuhan Multi Sejahtera (BMS) shares by individual Charles Antonny Melati (CAM), the Shares were in turn to be acquired by Sindo Resources, while Charles has entered into another exchangeable loan agreement with FN Resources Pte Ltd, Tan Fuh Gih and Goh Yeo Hwa as owner investors for additional funding for the Acquisition.

The loan was to be exchangeable into a shareholding interest of 11.5 percent in the capital of Sindo Resources subject to the fulfillment of certain conditions precedent, including that Sindo Resources acquires BMS.

As of the company's announcement, PSL Energy and other investors have funded CAM for two of the four tranches of the consideration payable by CAM to BMS Shareholders for his acquisition of the BMS shares, in which up to US$2,424,846 of PSL's exchangeable loan remains to be disbursed as outstanding funding.

As CAM is seeking to rationalise his investments in the coal-mining business, CAM has proposed to divest his entire interest in Sindo Resources to an unrelated third party, Angelo Fernandus, who is an Indonesian national, and has sought the support of PSL Energy and the other Investors for such divestment, and in connection therewith, a release of his obligations from the exchangeable loan.

As PSL Energy and the Other Investors are supportive of CAM's Divestment, CAM has divested his entire shareholding in Sindo Resources to Angelo Fernandus, with Angelo Fernandus replacing CAM as a director of Sindo Resources, while PSL Energy and the other investors have entered into a restated takeover agreement dated 3 April 2012 with CAM, Angelo Fernandus and the BMS Shareholders, pursuant to which the Investors agreed to pay BMS Shareholders the remaining two tranches consideration payable by CAM for CAM's acquisition of the BMS shares - instead of PSL Energy and the other Investors funding CAM for such consideration - and to the extent as initially contemplated.

PSL Energy and CAM have entered into a restated fee agreement dated 3 April 2012 in substitution of the fee agreement for the continued fee payment by PSL Energy to CAM, such payment being contiguous with the funding of the PSL Outstanding Acquisition Consideration in two stages, while CAM and certain shareholders of Sindo Resources have subscribed for new shares in Sindo Resources, with proceeds deployed to fund the Acquisition.

Subsequent to the completion of the foregoing restructuring, PSL Energy, Sindo Resources and the other shareholders of Sindo Resources had entered into a shareholders' agreement dated 18 May 2012 to regulate the relationship between the shareholders of Sindo Resources inter se, and pursuant to such agreement, PSL Energy retains the right to nominate and appoint one director to the board of directors of Sindo Resources.

Sindo Resources has as of 16 May 2012, completed its acquisition of BMS via two Indonesia incorporated subsidiaries of Sindo Resources, namely PT. Bubuhan Surya Mandiri (BSM) and PT. Surya Bahtera Mandiri (SBM).

Following the acquisition, Sindo Resources now hold 99.98 percent interests in SBM (with the remaining 0.02 percent of SBM to be held by Tjun Jong (who is a BMS Shareholder and a shareholder of Sindo Resources). SBM also holds 99.9 percent of the issued and paid-up share capital of BSM, with the remaining 0.1 percent held by Tjun Jong.

BSM also holds 99.98 percent of the issued and paid-up share capital of BMS (with the remaining 0.02 percent held by Tjun Jong.

PSL Energy currently holds a direct shareholding interest of 11.503 percent in Sindo Resources and an effective interest of 11.5 percent in BMS.

BMS is a private limited liability company that holds 6 permits for coal mining, covering a total area of 9,000 ha. Five of these permits are IUP Exploration permits covering 8,805 ha while the last permit is an IUP Production Operation permit covering 195ha which was granted for a period of 8 years, with possible extension of tenure.

BMS has already commenced production operations at the mining site located in Sungai Buluh, a village located within the Muara Bulian subdistrict of Batanghari Regency, Jambi, since July 2011. At the end of February this year, based on unaudited management accounts provided to PSL, BMS has made total cumulative sales of up to 230,000 tons of coal.

Editing by Er Audy Zandri