Adaro hires JPMorgan, banks to sell $600m of bonds, loans

Adaro hires JPMorgan, banks to sell $600m of bonds, loans

Denise Kee, Bloomberg/Singapore

PT Adaro Indonesia, the country's largest coal producer, is
trying to cut borrowing costs by selling bonds and taking new
loans to repay a S$600 million deal signed three months ago, said
two bankers involved in the financing.

JPMorgan Chase & Co. and Goldman Sachs Group Inc. will
underwrite a bond sale to raise as much S$350 million for Adaro,
the bankers said. The company also hired JPMorgan, DBS Group
Holdings Ltd. and Sumitomo Mitsui Banking Corp to arrange a S$250
million four-year term loan, said the bankers, who are involved
in providing the loan and declined to be identified.

The refinancing means Standard Chartered Bank and 12 other
lenders will cease earning interest on the five-year loan they
arranged in August. The loan helped a group of buyout firms and
investors pay most of the costs of their acquisition of Adaro.

Adaro runs a coal mine in Kalimantan, the Indonesian part of
Borneo island, and has almost 2 billion metric tons of coal
reserves.

Indonesian coal mining companies including Adaro and PT Bumi
Resources plan to boost production by 9.7 percent next year after
buyers in Japan, Taiwan, India and South Korea said they expect
to increase demand by at least 5 percent, Jeffrey Mulyono,
chairman of the Indonesian Coal Mining Association said Aug. 1.

The group of investors includes GIC Special Investments,
Singapore's investment agency which manages the country's long-
term foreign reserves; private equity units of Citigroup Inc. and
Goldman Sachs Group Inc.; and Indonesian investors including
Edwin Soeryadjaya, son of the founder of Indonesia's largest
carmaker PT Astra International.

Indonesia was the fourth-largest coal producer in the Asia
Pacific region after China, Australia and India in 2003,
according to BP Plc's Statistical Review of World Energy. Most of
Indonesia's output is thermal coal, used to generate electricity.