Release: Moody's: Antam impact of possible stake buy

(Hong Kong, August 24, 2005) -- Moody's Investors Service commented today that PT Aneka Tambang Persero's (Antam) potential acquisition of an 18.72% minority stake in PT Freeport Indonesia (FI) represents a material transaction comparing to Antam's asset size of US$630 million as at FY2004. The company's rating would likely be under pressure if Antam were to proceed with such investment with a majority debt-funded strategy. Moody's statement followed Antam's announcement that it has appointed a financial advisor for the possible investment.

Moody's understands that Antam is considering the acquisition of both the government's 9.36% stake in FI and the 9.36% stake currently held by PT Indocopper Investama, an Indonesian company wholly owned by Freeport McMoran (FCX, rated Ba3/stable). Antam has appointed the financial advisor to undertake due diligence regarding the potential acquisition and has yet to decide whether or how to proceed with the transaction.

FI is unlisted and currently majority owned (90.64%) by FCX, which is listed in the US. FI operates, under a Contract of Work with the Government of Indonesia, in the Grasberg mining complex -- a large copper and gold mine in Indonesia. At end-2004, FI's share of proven and probable reserves totaled more than 40 billion pounds of recoverable copper and more than 46 million ounces of recoverable gold.

Although the potential size of the investment and the associated financing package remain uncertain at this stage, Moody's notes that if Antam decided to majority-debt-fund the government's stake or the entire potential 18.72% stake, this could put negative pressure on the rating. The key credit metric that Moody's would consider for a rating downgrade includes Adjusted Debt-to-EBITDA ratio to exceed 6x.

On the other hand, if the potential acquisition is majority equity-funded, including a share swap plan for the government's stake -- i.e. the government transfers its shares of FI in exchange for newly issued Antam shares -- then this event itself is unlikely to have an impact on the company's current B1 local currency corporate family rating.

PT Aneka Tambang Persero, headquartered in Jakarta, Indonesia, is listed on the Indonesian and Australian stock exchanges and is 65% owned by the Government of Indonesia. The company is involved in the exploration and production of nickel ore, smelting of ferronickel, exploration, and production and refining of gold ore. Total revenue for the fiscal year to December 2004 was approximately US$300 million.(end of release)