JP/14/RIO
KPC's sale is legal: Lawyer
The Jakarta Post Jakarta
A respected lawyer said on Thursday that the deal allowing PT Bumi Resources to acquire the coal mining firm, PT Kaltim Prima Coal (KPC), from Anglo-Australian mining firm Rio Tinto and Anglo-American energy firm BP PLC was legal.
Todung Mulya Lubis, who represents KPC in its protracted dispute with the East Kalimantan provincial administration over the divestment of company shares, said Bumi was going to take over KPC by buying out two overseas holding companies belonging to the BP PLC and Rio Tinto firms.
Todung said it was an offshore transaction and outside Indonesia's jurisdiction.
"It did not violate any laws (to sell shares)," Todung told The Jakarta Post on Thursday.
In addition, the sales would not negate the coal agreement between KPC and the government. This means KPC's contractual obligation -- to divest 51 percent of its shares to the Indonesian government or Indonesian-controlled firms -- still exists.
"The offshore agreement is irrelevant to the coal agreement. So, the obligation to sell 51 percent shares remains," Todung said.
Meanwhile, the Anglo-Australian mining conglomerate, Rio Tinto Ltd., said on Thursday in Melbourne that it was satisfied with the US$500 million price tag put on KPC, according to Dow Jones
Rio and its equal partner in KPC, BP, have agreed to sell the operation to Bumi, which will pay $313 million in cash and assume the mine's $187 million debt.
The sale to Bumi has created controversy in Indonesia because the transaction worth $500 million is well below what had previously been negotiated.
Earlier negotiations valued KPC at $822 million, and would have allowed East Kalimantan and the local government to buy 31 percent of the mine, and the state coal mining firm, Bukit Asam, 20 percent.
The strategy was part of the government's move to intervene in the divestment of 51 percent of KPC's share.
"We are quite satisfied with the price," Rio Tinto Chief Executive Leigh Clifford said, adding that the previous $822 million valuation was out of date.
He said he was "reasonably confident that things will proceed satisfactorily."