KPC seeks approval to sell its shares

JAKARTA (JP): Coal mining giant PT Kaltim Prima Coal wants government approval to offer a portion of its shares to the public to fulfill a mandatory divestment program.

The company's assistant managing director, Hadi S. Hadiprayitno, said Tuesday KPC preferred selling its shares on the stock market rather than through direct private placement as proposed by the government.

He said selling the company's shares to the public through the stock market would give all Indonesians an equal opportunity to have a stake in the company.

Director General of Mining Adjat Sudradjat has recently ordered KPC to sell 23 percent of its shares through a direct placement to four companies, including state coal mining company PT Tambang Batubara Bukit Asam, to fulfill its divestment obligation.

An informed source said the three other companies were military foundation Yayasan Markas Besar ABRI (Yamabri), PT Iroda, and PT Pakarti Trimitra. They will be coordinated by Bukit Asam.

Adjat ordered KPC to sell its shares to the companies starting April 1.

"We will comply with the government's decision. But, we still hope to benefit from the divestment whoever is going to buy our shares," Hadi 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 13.5 million tons this year.

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

Vice president of the Indonesian Mining Association (IMA) M. Simatupang believed the government ordered KPC to divest through a direct private placement to prevent foreign investors from controlling the stake sold in the stock market.

According to the latest capital market regulation, a listed company can own 100 percent of a listed company's shares, he said.

"If it happens, then the local people will have no chance to own the company's shares as stipulated in the contract," he said.

Previously, foreign investors were only allowed to own up to 49 percent of listed company's shares.

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 INCO International Nickel Indonesia, based in South Sulawesi, was allowed to sell its shares through the local stock market.

Simatupang hoped the government would not intervene in determining the prices of KPC's shares for the four buyers it has appointed.

"Let an independent underwriting company determine the prices," he said.

KPC's assets amounted to US$1 billion this year, up from $600 million in 1992 and recorded $400 million in sales this year, slightly above last year's figure. (jsk)