KPC plans to sell part of its shares

JAKARTA (JP): PT Kaltim Prima Coal (KPC) has no choice but to sell part of its shares through private placement to fulfill a mandatory divestment program, a senior official has said.

"We are firm in our decision that the company must sell its shares through direct private placement, not through the stock exchange to fulfill its divestment obligation," the Ministry of Mines and Energy's director general of mining Rozik Boedioro Soetjipto told reporters over the weekend.

Rozik noted, however, that the government would not be involved in the selection of the buyers of the company's shares. "KPC is free to select its local partners," he said.

Former director general of mining Adjat Sudradjat ordered KPC in March to sell 23 percent of its shares through a direct placement to four Indonesian companies, including state coal mining company PT Tambang Batubara Bukit Asam, the military foundation Yayasan Markas Besar ABRI, PT Iroda, and PT Pakarti Trimitra.

KPC is required under contract to, between the fifth year and 10th year of its commercial production, divest up to 51 percent of its shares either to the government, Indonesian people or companies controlled by Indonesians.

According to the contract, the government decides the type of divestment.

KPC did not only reject the appointment of the four companies as the buyers of its shares but also opposed the direct private placement scheme.

The company prefers selling its shares to the public through the stock market to give all Indonesians an equal opportunity to have a stake in the company and "to create a sense of belonging to the Indonesian people towards the company," KPC managing director Hadi S. Prayitno once said.

KPC is equally owned by British Petroleum and Rio Tinto, both from Britain, and it is operating a rich coal mine in Sangatta, East Kalimantan.

It is now the country's largest coal mining company, with a projected output of 15 million tons this year.

It is part of the First Generation coal mining Contract of Works signed by the government in the 1980s. Other contractors of the same generation include Adaro Indonesia, Arutmin Indonesia, Berau Coal, Kideco Jaya Agung, Multi Harapan Utama, Allied Indo Coal and BHP Kendilo Coal Indonesia.

Rozik said other coal mining contractors of the first generation were also required to sell their shares through direct private placement schemes.

The government has, thus far, applied different schemes for mining companies to divest their shares.

Copper and gold mining company PT Freeport Indonesia, based in Irian Jaya, was required to sell its shares to the government and Indonesian companies but nickel mining company PT International Nickel Indonesia, based in South Sulawesi, was allowed to sell its shares through the local stock market.

Analysts said the government opposed KPC's public offering plan because if it did so, most of the shares sold through the stock market would fall into the hands of foreign investors.

The latest capital market regulation allows foreign investors to buy up to 100 percent of a listed company's shares. Previously, they were only allowed to own up to 49 percent of listed company's shares. (jsk)