Govt blocks province's effort to control KPC shares<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
The government said on Wednesday it would purchase a 20
\npercent stake in PT Kaltim Prima Coal (KPC), dashing the hopes of
\nthe East Kalimantan provincial administration to become the
\nmajority shareholder in the giant coal mining company.<\/p>\n
Minister of Energy and Mineral Resources Purnomo Yusgiantoro
\nsaid the central government would purchase 20 percent of the 51
\npercent stake to be sold by KPC, while offering half of the
\nremaining 31 percent to East Kalimantan and the remaining half to
\nKutai Timur regency.<\/p>\n
\"The decision to distribute the 51 percent stake was made
\ndirectly by President Megawati Soekarnoputri during a limited
\nCabinet meeting,\" Purnomo said here.<\/p>\n
Concerning the source of the money to purchase the shares,
\nPurnomo said the central government would immediately carry out a
\ndue diligence of investors interested in purchasing shares from
\nboth from the central government and the two regional
\nadministrations.<\/p>\n
The announcement represents a major step in the government's
\nefforts to end years of dispute over the divestment of KPC.<\/p>\n
Initially, KPC, which is equally owned by Anglo-Australian
\nmining group Rio Tinto and Anglo-American energy giant BP Plc.,
\nwas bound by a 30-year contract with the government to sell a 51
\npercent stake to Indonesian investors by the end of last year.<\/p>\n
The East Kalimantan provincial administration, backed by local
\ninvestors, has for years aggressively been seeking to acquire a
\ncontrolling 51 stake in KPC.<\/p>\n
However, KPC rejected the province's overtures for a number of
\nreasons, including the low price it was offering. KPC and the
\ncentral government have agreed to value the 51 percent stake at
\nUS$419 million.<\/p>\n
This rejection moved East Kalimantan to file a lawsuit earlier
\nthis year with the South Jakarta District Court in a bid to force
\nKPC to sell it the 51 percent stake.<\/p>\n
But KPC remained defiant, saying it would not sell the stake
\nas long as the administration did not withdraw the suit.<\/p>\n
The dispute further pushed back the divestment deadline from
\nJuly 6 to July 31. If the divestment process was unable to be
\ncompleted by this new deadline, the process could have been
\ndelayed until next year, with the obvious risk that the share
\nprice could change.<\/p>\n
With the July 31 deadline approached, the East Kalimantan
\nadministration decided on Monday to withdraw its lawsuit against
\nKPC.<\/p>\n
The administration's move allowed KPC to move forward in its
\nbid to sell the shares.<\/p>\n
\"We are happy that KPC is finally ready to sell the shares
\ntoday (Wednesday), so that the divestment process can go ahead,\"
\nAntara news agency quoted Purnomo as saying.<\/p>\n
He said the share offer would be held within three months, and
\nthe payment would be made three months after that.<\/p>\n
After the sale of the shares, both Rio Tinto and BP will
\nremain the majority shareholders, each holding a 24.5 percent
\nstake. This will allow the two companies to control the
\nmanagement of the company.<\/p>\n
East Kalimantan will be offered 15.5 percent of the shares,
\nequal to the number of shares offered to the Kutai Timur regency
\nadministration.<\/p>\n
Analysts say the small percentage of shares offered them will
\nmake it difficult for both regional administrations to raise the
\nmoney to purchase the shares. Many local investors were
\ninterested in providing financial support in the expectation of
\ngaining a majority stake in the coal company.<\/p>\n
KPC, which holds a concession in Sangatta, Kutai Timur
\nregency, East Kalimantan, is among the country's largest coal
\nproducers, with an annual output of more than 15 million tons. It
\nreportedly controls such a large coal deposit that it will be
\nable to continue its operations for several more decades.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/govt-blocks-provinces-effort-to-control-kpc-shares-1447893297",
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