PTBA may cancel its plan to buy KPC shares
Thursday, March 6 2003 - 03:11 AM WIB
"The company may withdraw from its plan to buy KPC shares, if it thinks the price is still too high," Roes Aryawijaya, the deputy of the state minister of state owned enterprises, said in Jakarta on Wednesday that
He said that the PTBA would accept any decision made by PTBA in its plan to buy KPC shares. "It is up to PTBA whether or not it will go ahead with its takeover plan. The government will not interfere with the management in deciding the deal," he added.
Minister of Energy and Mineral Resources Purnomo Yusgiantoro said that he had agreed in principal on the plan to extend the deadline of PTBA to settle the purchase of 20 percent of KPC shares for another two or three months from January 31. The total value of KPC shares are worth US$822 million, meaning that the price of the 20 percent share that will be purchased by PTBA is 20 percent of the total value.
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 later then appointed the 20 percent of KPC shares to PTBA. (*)