Bapepam orders Bumi to disclose deal

Bapepam orders Bumi to disclose deal

Fitri Wulandari, The Jakarta Post, Jakarta

The Capital Market Supervisory Agency (Bapepam) has required
publicly listed mining firm PT Bumi Resources to disclose details
to the public about its planned acquisition of coal mining giant
PT Kaltim Prima Coal (KPC) before it closes the transaction.

Bapepam Chairman Herwidayatmo said on Friday that the
requirement was part of measures to help ensure transparency.

He added that the planned acquisition must be approved by the
minority shareholders.

Herwidayatmo explained that Bumi must unveil details about
KPC, the transaction value, reasons for the acquisition, and the
impact on the company's financial performance.

These must be published in a newspaper of national circulation
at least 28 days before the shareholders meeting.

Bumi Resources must also appoint an independent party to do an
appraisal on the value of the transaction.

"We have talked with them (Bumi Resources officials) ... As a
publicly listed company, Bumi Resources is required to follow a
number of procedures to ensure transparency," he told The Jakarta
Post.

He added that Bumi Resources will submit a full written report
on the transaction to Bapepam next Monday.

The planned acquisition of KPC has gained media attention
especially after Anglo-Australian mining group Rio Tinto and
British-American energy giant BP Plc, both equal owners of East
Kalimantan-based KPC through their respective overseas registered
investment vehicles, announced that they would sell their
overseas registered firms to Bumi. The deal was made at a time
when a team set up by the Office of the State Minister of State
Enterprises was in the process of finalizing talks with the East
Kalimantan administration and state-owned coal mining firm PT
Tambang Batubara Bukit Asam, in which the latter two would
purchase a 51 percent stake in KPC. The minister was apparently
infuriated.

Under a 1982 mining contract signed with the central
government, KPC is required to divest a 51 percent stake to local
investors. But the divestment process has been delayed for years
partly due to a dispute with the local administration. The
government then set up the special team to help facilitate the
divestment process and decided that the controlling stake in KPC
would be sold to East Kalimantan government-owned company (31
percent shares) and Bukit Asam (20 percent shares).

Another point of controversy is that BP and Rio Tinto sold the
entire KPC stake at a value of US$500 million, which is much less
than the $822 million valuation made by the government.

There are also questions over why the foreign investors had
suddenly pulled out of KPC, which is the country's largest and
most profitable mining firm producing some 18 million tons of top
quality coal per year for the export market.

Meanwhile, P.D.D. Dermawan, a lawyer representing East
Kalimantan, was quoted by the Asian Wall Street Journal as saying
that the province and its partners have made a counteroffer for
KPC in a move that could complicate efforts by BP and Rio Tinto
to sell the mining firm to Bumi.