'Bapepam should ask mining firm Bumi Resources to disclose deal'

Fitri Wulandari, The Jakarta Post, Jakarta

The Capital Market Supervisory Agency (Bapepam) must request publicly-listed mining company PT Bumi Resources to disclose the details on it will finance its controversial acquisition of coal mining giant PT Kaltim Prima Coal (KPC) to ensure transparency, an analyst said.

Norico Gaman of BNI Securities added that Bumi had also to explain to the public how it managed to obtain such a low price for KPC.

"As a publicly listed company, Bumi Resources must explain to the public about the transaction so that it is clear where they are getting the money from and what collateral they put up for this transaction," Norico told The Jakarta Post on Thursday.

The planned acquisition of the East Kalimantan-based KPC has been controversial ever since the owners of KPC: Rio Tinto and BP Plc, surprisingly announced earlier this week that they were selling KPC to Bumi at a time when a government-appointed team was finalizing a plan to allow state-owned mining firm PT Tambang Batubara Bukit Asam and companies owned by the East Kalimantan administration to acquire a 51 percent stake in KPC.

Under a 1982 contract signed with the central government, the owners of KPC are required to unload up to a 51 percent stake in the coal company to local investors by 2001. But lengthy dispute with the local East Kalimantan administration has delayed the divestment process, and prompted the central government to intervene.

The US$500 million price tag offered to Bumi has also raised suspicions as the government had earlier agreed that the value of 100 percent of KPC's shares was about $822 million.

Norico said that Bumi must explain to the public how it would finance the acquisition plan.

The company earlier said that it would seek loans from a syndication of banks which included Switzerland's Credit Suisse First Boston (CSFB) and Singapore's United Overseas Bank (UOB).

But with Bumi's assets being only around Rp 3.6 trillion as of the end of last year, and with a profit of Rp 91 billion, many are questioning how the company could obtain loans worth $500 million or equal to around Rp 4.5 trillion.

Norico said there was a possibility that Bumi Resources would put KPC up as the collateral to get the money from the banks.

"Because to borrow money the banks will require collateral of more than 100 percent of the loan," Norico explained.

"Bumi Resources could be staging a corporate leveraged buyout," he added.

Separately, KPC's public affairs manager Drajat Pandjawi said that operations were running as usual at the mine site in Sangatta.

According to Drajat, KPC produces some 18 million tons of high quality coal annually with 96 percent being sold on international market. The company rakes in revenues amounting to between US$450 million and 500 million per year.

Box

Who owns Bumi Resources?

1. Long Haul Holdings : 67.27% 2. PT Kustodian Sentral Efek Indonesia: 15.48% 3. Minarak Labuan CO (L) LTD : 14.87% 4. Bakrie Capital Indonesia : 2.12% 5. Yayasan Kartika Eka Paksi : 0.13% 6. Others : 0.14%

Bumi has interests in the oil, gas, mining and energy sectors. Bumi Resources acquired 80 percent of the shares in BHP Mineral Exploration Inc. which owns mining firm PT Arutmin Indonesia in 2001. The company has two oil concessions, one in Yemen with a working interest of 50 percent, and one in Sambidoyong (West Java) with a working interest of 40 percent. It also controls 100 percent of Hotel Bumi Tashkent International in Uzbekistan.

Source: JSX Watch 2002, Bisnis Indonesia