KPC's sale is legal: Lawyer

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million valuation was out of date.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."