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.