'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.