Release: Medco reports the signing of sale purchase agreement for Sarulla geothermal project

In order to comply with the BAPEPAM’S Rule No. X.K. 1, Regarding Disclosures Made To Public immediately, PT Medco Energi Internasioanl Tbk (MedcoEnergi) is pleased to report that:

 

1. On Monday, October 8, 2007, MedcoEnergi and its wholly owned subsidiaries, PT Medco Power Indonesia and MEI Euro Finance Limited (altogether called (“MedcoEnergi”/ “the Company”) have entered into a Sales Purchase Agreement (SPA) with Kyuden International Corporation (Kyushu), one of the largest electricity utility company in Japan and owns and operates a number of geothermal power plants in Kyushu and has several independent Power Plants projects outside of Japan, to sell 50% of its stake in the Sarulla Geothermal 300MW Power Project (“Project’) in North Sumatra to Kyushu.

 

2. This SPA will provide MedcoEnergi and Kyushu 24.75% participation interest respectively in the Joint Operating Contract and Energy Sales Contract (JOC-ESC). In addition, through this SPA MedcoEnergi and Kyushu will also own 25% each of the entire issued and outstanding shares in the capital of the operating company of the Project which will be established by the Consortium MedcoEnergi, Itochu Corporation, Ormat Technologies (Consortium Medco-Ormat-Itochu).

 

3. The total consideration for the sale of such stake is USD 6,000,000, which will be paid in 2 phases. The 1st phase would be equal to USD 2,750,000 due at the Financial Close Date and the remaining amount of USD 3,250,000 would be paid at the expansion of the Project.

 

4.  The parties expect to close this transaction, after the fulfillment of some conditions, by November 1, 2007. The signing of this SPA was a follow up to previously signed Memorandum of Understanding (MOU) between MedcoEnergi and Kyushu on August 20, 2007.

 

Background

The Sarulla Geothermal Project is located in Tapanuli Utara, North Sumatra , represents the largest single-contract geothermal project to date in the geothermal industry worldwide. It is a reflection of the large scale and high productivity of Indonesian geothermal resources, as well as an indicator of Indonesian geothermal power industry potential.

 

The Sarulla Geothermal Project was awarded to Medco-Ormat-Itochu Consortium in July 2006 with MedcoEnergi as the lead of the Consortium. The Consortium is currently waiting for the finalization of the Deed of Assignment (DOA to operate The Project, amendment of the 30-year JOC-ESC which will be signed among Consortium, PT PLN and PT Pertamina

 

Financial Impact

The signing of the SPA will reduce the financial liability of MedcoEnergi toward this Project. In addition, the capability and experiences of Kyushu in operating geothermal power plant project will enable MedcoEnergi to share the financial and operating risks in operating the Project. (end of release)