Bumi to get $280m loan to buy KPC

Bumi to get $280m loan to buy KPC

Bloomberg Jakarta

PT Bumi Resources, an Indonesian mining company, will get a US$280 million five-year loan to help fund its purchase of Indonesia's No. 2 coal miner from BP Plc. and Rio Tinto Group, the company said.

Two-thirds of the loan will be used to refinance the debt of PT Kaltim Prima Coal, which was equally owned by BP and Rio Tinto. Bumi will use the remaining one-third of the loan to pay BP, the world's third-biggest publicly traded oil company, and Rio Tinto, the company said in a statement published in local newspapers.

BP and Rio Tinto, the world's third-biggest mining company, agreed in July to sell the mine for $313 million in cash and Bumi agreed to assume $187 million in debt. The sale has been marred by a dispute which led to a stop in production as a result of a strike which is in its fourth day.

Jakarta-based Bumi will disclose the names of the banks that will provide the loan as soon it gets a fixed list, the statement said.

The loan may have an average interest rate of 6 percent above the Singapore Interbank Offering Rate. That may change prior to the Oct. 31 shareholders' meeting when the company seeks approval for the acquisition.

Kaltim Prima operates a coal mine near Sangatta in East Kalimantan, which produces around 18 million tons of thermal coal a year. The coal, which is used by power plants, is exported to Asia, Europe and the U.S. The company employs about 2,700 people.

The coal mine's production stopped on Aug. 29 as workers went on strike, demanding a bonus after the agreement by BP and Rio Tinto to sell the company.

Kaltim Prima's management and its workers' unions were in talks to resolve the dispute, Nunik Maulana, a spokeswoman, said last week from the company's office in East Kalimantan. About 300 workers were on strike then, she said.