Bumi obtains shareholders approval to acquire KPC
The Jakarta Post, Jakarta
Shareholders of publicly-listed PT Bumi Resources approved on Tuesday the company's plan to acquire East Kalimantan-based coal mining giant PT Kaltim Prima Coal (KPC).
The shareholders also endorsed Bumi's move to borrow money from international lenders to help finance the acquisition.
According to a press statement issued following an extraordinary shareholders meeting, the company is finalizing talks with foreign financial institutions grouped under the International Club Deal Consortium to seek some US$430 million in loans.
Bumi head of investor relations Martinus Peter was optimistic the company could raise the funding needs for the transaction by Oct. 10.
The transaction is valued at $500 million. So far, Bumi has paid $40 million. While $430 million would be raised through loans from financial institutions, Martinus said that the company was considering issuing bonds to raise the remaining $30 million.
"We might issue bonds to finance the remaining $30 million," he said. "I cannot say anything certain about that because right now the structure of the financing of the acquisition is still ongoing."
KPC is equally owned by Anglo-American energy giant BP Plc. and Anglo-Australian mining giant Rio Tinto. The two reached an agreement with Bumi to sell their respective foreign-registered vehicle companies, which own all the KPC shares, to Bumi.
KPC operates a huge coal mining site in Sangatta, Kutai Timur regency, producing about 16 million tons a year. Some 96 percent of the high quality coal is exported to international markets, generating $450 million in revenue each year. Under a contract of work with the central government, the KPC owners are obliged to divest a majority stake to local investors. But this divestment program has been stalled for more than two years due to various reasons.
The deal with Bumi has caused a furor as it was done 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 coal mining firm PT Tambang Batubara Bukit Asam on the divestment of a majority stake in KPC. The province and the state firm would purchase a 51 percent stake in KPC.
The controversial plan caused the Jakarta Stock Exchange to suspend the trading of Bumi's shares for a few days last month. After the company provided an explanation to market authorities, JSX resumed the trading on Aug. 20.
Bumi's shares were traded on the JSX at Rp 170 (2 U.S. cents) on Tuesday, up from Rp 160 the previous day.