'Big Boys' fight for control of Adaro mining firm
'Big Boys' fight for control of Adaro mining firm
Fabiola Desy Unidjaja, The Jakarta Post, Jakarta
It is no secret that some people are willing to go to enormous
lengths to acquire certain precious things -- a notion that comes
to mind in the protracted legal dispute involving ownership of
mining company PT Adaro Indonesia, one of the country's largest
coal producers.
Singapore-listed Beckett Pte. Ltd. has been facing-off with
Deutsche Bank Aktiengesellschaft over a ruling from an Indonesian
court in favor of the latter, which overruled a district court's
decision in favor of Deutsche Bank.
Hugely expensive, full-page advertisements concerning the
dispute from both sides have appeared in major Indonesian
newspapers, defending their respective interpretations of the
court's decision.
The coal industry in Indonesia is booming, with demand for the
energy product increasing by 5 percent per year, with high prices
being paid for the commodity, some predicting it could reach
US$50 per ton.
What is particularly attractive about Adaro is that its coal
is especially good quality, with a low sulfur content of 0.1
percent making it the world's most environmentally friendly coal,
and with production at 28 million tons per year.
Thus, the stakes are very high indeed.
In 1997, Adaro won a 25-year contract to operate a coal mine
in Tanjung, South Kalimantan, with Indonesian tycoons Sukanto
Tanoto, Hasyim Djojohadikusumo and Prabowo Soebianto -- son-in-
law of the former president, Soeharto -- holding a majority stake
in the company via Beckett Ltd.
Another major shareholder was Australian company New Hope that
owned a 41 percent stake.
Over the next six years, due to debts of US$100 million,
around half of Beckett's stake in Adaro was acquired by its
creditor Deutsche Bank, in a transaction Beckett later claimed
was illegitimate and which is at the center of the ongoing legal
battle.
The German lender sold its shares to a local company PT
Dianlia Setyamukti owned by Indonesian tycoons Edwin Soeryadjaja
and Benny Soebianto. After the purchase, Dianlia owned about 49
percent stake in Adaro.
Last month, a consortium of Indonesian buyers -- Edwin, Benny,
T.P. Rachmat and Garibaldi Boy Thohir -- bought New Hope's 41
percent stake in Adaro for $378 million.
"We were informed about the dispute by pak Sukanto over the
phone just a few days before we completed the deal to purchase
the shares," one of the buyers, Boy Thohir, told The Jakarta
Post.
He added that the information did not stop the consortium from
continuing with the purchase.
"We are acting in good faith and this deal shows that
Indonesian business is moving up," Boy said.
Still, the legal saga is expected to heat up, with both
Deutsche Bank and Beckett unlikely to back down from the fight,
having taken the case to the Supreme Court.