PTBA and KPC asked to renegotiate share prices
Thursday, March 27 2003 - 04:08 AM WIB
The minister advised that it would be better for PTBA and the East Kalimantan authority to renegotiate the prices of the KPC shares so that the new deal could be stated in the new framework agreement which was now being formulated by the government.
"When the framework agreement is completed, there will be no more problem related to share prices," he added.
The government has agreed to extend the deadline for the sale of KPC?s shares after the appointed bidders state owned coal producer PTBA and companies representing East Kalimantan authorities failed to settle the transaction under the existing schedule.
According to the existing framework agreement, if the appointed buyers fail to meet the January 31 deadline in settling their purchases of KPC?s shares, KPC is allowed to offer the shares to other Indonesian buyers after consultation with the government.
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 latter then appointed the 20 percent of KPC shares to PTBA.
According to the existing agreement, the value of KPC?s shares is US$822 million. In this case, PTBA is required to pay US$164.4 million or 20 percent of the total value. However, after conducting a study with the help of PricewaterhosueCopper, PTBA said that the fair price for the entire shares were US$600 million.(*)