Singapore's GIC set to help finance Adaro deal: Report

THE Government of Singapore Investment Corporation (GIC), Malaysian tycoon Robert Kuok and several international financial institutions (IFCs) are said to be ready to finance a consortium of Indonesian businessmen in their effort to take over Indonesia's largest coal mine PT.Adaro Indonesia, Business Times reported Friday.

And the deal - estimated to cost about US$1 billion - could be wrapped up soon, despite a legal spat over the ownership of the mine.

The daily said thatBT understands that Temasek Holdings, which was originally linked to the proposed transaction, has pulled out due to the legal uncertainty.

According to an informed source, US-based Noonday Asset Management is working to structure a deal that could involve Robert Kuok, Goldman Sachs and Citigroup providing equity finance, while GIC is part of a group of investors willing to take part in a US$600 million syndicated loan. The loan would be made to Alam Tri Abadi, an Indonesian company set up to buy over the Adaro Indonesia coal mine, and to PT Indonesia Bulk Terminal (IBT).

'We are working very hard to close the transaction but nothing is set in stone,' the source said. 'We are under contractual obligations with Australia's New Hope Corporation to close the transaction and that is what we are trying to do.'

New Hope, which has a 40.8 per cent stake in Adaro and 50 per cent stake in IBT, this month approved the sale of its stake in both assets at its annual general meeting. Dianlia Setyamukti, an Indonesian company controlled by prominent businessman Edwin Soeryadjaya, owns the remaining stakes in Adaro and IBT.

But the transaction could face some hurdles as Singapore registered Beckkett Pte Ltd - which used to hold a 40 per cent stake in Adaro and IBT through its majority-owned subsidiary PT Asminco Bara Utama - has filed a suit in the Singapore courts against the Singapore branch of Deutsche Bank and Dianlia Setyamukti.

Soeryadjaya, through Dianlia Setyamukti, bought a 40 per cent stake in Adaro and IBT from Deutsche Bank in 2002 after Asminco defaulted on a US$100 million bridge facility. Beckkett, which owns 98.8 per cent of Asminco, acted as a guarantor for the loan and is suing Deutsche Bank for allegedly breaching its duty as a pledgee of the shares in Adaro and IBT when it sold them to Dianlia Setyamukti for US$44.2 million in 2002.

The Singapore Supreme Court last month turned down an appeal by Beckkett's lawyers to use certain documents in Indonesia as part of its legal case here. BT understands the documents could raise questions about how the sale of the pledged shares in Adaro and IBT was executed.

According to a transcript taken from the website of the Singapore Supreme Court, the presiding judge in the High Court noted that 'Deutsche Bank had grounds to believe that the documents, if released, would expose it to potential criminal proceedings in Indonesia'.(*)