BLOOMBERG/Newmont Sues Indonesia’s Merukh Over $300 Million Loan Breach
By Andrea Tan
Jan. 26 (Bloomberg) -- Two units of Newmont Mining Corp., the worldâ€™s second-largest gold producer, are suing its Indonesian partner and businessman Jusuf Merukh in Singapore for reneging on the terms tied to a $300 million loan agreement.
Newmont Indonesia Ltd. and NVL (USA) Ltd. sued Merukhâ€™s PT Pukuafu Indah and five of his family members in a bid to get legal proceedings in Jakarta dropped as agreed under the loan, according to papers filed with the Singapore High Court. A closed hearing is scheduled for Jan. 28.
Newmont and Pukuafu are among shareholders of PT Newmont Nusa Tenggara, which operates the Batu Hijau gold and copper mine on Indonesiaâ€™s Sumbawa Island. Pukuafu has filed five lawsuits in Jakarta against Greenwood Village, Colorado-based miner Newmont disputing the ownership of the mine. Pukuafu claims itâ€™s entitled to a 31 percent stake while Newmont says it properly reduced its ownership.
The Merukhs and their legal representatives failed to turn up for arbitration in Singapore that ordered their Indonesian proceedings to be halted, according to court papers.
â€śWe donâ€™t know about Newmontâ€™s plan to sue us in Singapore about the loan agreement,â€ť Tri Asnawanto, Pukuafuâ€™s vice president of legal and external affairs, said by phone late yesterday. â€śBut we are ready to face it because we are not in breach of any agreement.â€ť
Pukuafu is a unit of Merukh Enterprise Corp., controlled by politician and businessman Jusuf Merukh, which has interests ranging from hotels to gold, copper and coal mines in Indonesia.
The family and Pukuafu â€śnot only failed to terminate the Indonesian litigation as promised, but in fact, over time commenced additional litigation before the Indonesian courts, Newmont said.
Pukuafu â€śhas steadfastly refused to cooperate,â€ť after benefitting from the loan and Newmontâ€™s â€śindulgences,â€ť the U.S. company said in court papers. At least $260 million of the loan has been drawn, Newmont said.
Newmont extended the $300 million loan to Pukuafu in 2009 after the Indonesian company defaulted on payments to its bondholders.
Blake Rhodes, Newmontâ€™s deputy general counsel, said the company had no choice but to initiate court proceedings in Singapore.
â€śDespite repeated attempts urging Pukuafu and members of the Merukh family to live up to their contractual obligations, they have not,â€ť Rhodes said in an e-mailed statement.
The case is Newmont Indonesia Ltd. v PT Pukuafu Indah, OS1192/2010 in the Singapore High Court.