Bumi obtains shareholders approval to acquire KPC

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.