RI consortium buys Henry Walker assets

RI consortium buys Henry Walker assets

Fabiola Desy Unidjaja, The Jakarta Post, Jakarta

An Indonesian consortium led by PT Bumi Resources has agreed to
buy coal producer PT Darma Henwa, local affiliate of Australian
Henry Walker Eltin (HWE) group, which operates Bengalone coal
mine in East Kalimantan.

The acquisition deal was hammered out on Tuesday and will be
finalized as soon as the consortium makes the payment, although
the amount has not been disclosed, according to Bumi Resources
investor relations' head Martinus Pater.

"We have agreed on the purchase, but we are still working on
the details such as the amount of investment to acquire the
company," Martinus told The Jakarta Post on Tuesday.

The remarks confirmed an earlier report by Dow Jones, which
said that the move was a positive thing for creditors of ailing
HWE. Due to cash flow problems, HWE was forced to place itself
into administration on Jan. 31 because of financial difficulties.

Martinus refused to disclose the value of the investment or
the other companies within the consortium. "Along with Bumi
resources, there is an engineering and financial company taking
part in the consortium," he said.

Darma Henwa has a 10-year US$1.2 billion contract from Kaltim
Prima Coal to develop and operate the Bengalone coal mining. But
the contract also came with $110 million of upfront costs to
cover the plant and equipment -- which Darma and HWE have failed
to provide.

Martinus said that $110 million in investment was needed to
produce around 6 million tons of coal each year at Bengalone mine
that is estimated to have a reserve of 158 million tons.

"We are still working on the value of our purchase agreement.
We just have to wait for more details," he remarked.

The acquisition will enable Bumi to meet its output target
this year, Bumi's president director Ari S. Hudaya said as quoted
by Bloomberg.

Bumi has targeted a 13 percent increase in coal production for
this year to 45 million tons.