Singapore?s Firstlink plan to acquire stake in Indonesian coal venture in limbo

Singapore Exchange listed firm Firstlink Investment Corporation Limited is reviewing its plan to acquire stake in Indonesian mining venture after it had found that the target company had breached agreement.

In January 2005 Firstlink entered into subscription agreement to purchase S$3.5 million worth of exchangeable bond from Creanovate Pte. Ltd., a vehicle company whose major asset is 90 percent stake at PT. Perdana Andalan Coal (PAC). PAC, in turn has 60 percent stake in PT. Kencana Artha Buana (KAB). KAB has 72.5 percent stake in South Kalimantan coal miner PT. Senamas Energindo. PAC also has right to exploit 7 other coal concessions in South Kalimantan.

Under the Subscription Agreement Firstlink would be able to convert the bond into 30 percent stake at PAC in 18 months time. Under the agreement, PAC also gives Firstlink exclusive right to sell PAC?s coal.

However, later, Fisrtlink learned that coal mine held by Senamas Energindo had been sold to third party, hence breach of agreement, and the status change of KAB into ?foreign-investment company? had not been completed, another breach of Subscription Agreement. ?The Board notes that as long as the change of legal status of KAB has not been completed, legal ownership of Creanovate of certain coal mines in Indonesia, which are subject to Subscription Agreement is doubtful,? the company said in a statement released Wednesday.

The company said it was currently looking for legal advice and would make appropriate announcement after internal investigation was completed. (alex)