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JAKARTA -(Dow Jones)- Coal company PT Adaro Energy (ADRO.JK) said Wednesday it has signed a pact to acquire a controlling stake in unlisted coal miner PT Bhakti Energi Persada.
Adaro said in a statement it has two options for the acquisition of Bhakti Energi–the first is to provide up to a $500 million convertible three-year loan that will increase its stake by 51%, while the second is a share-swap option.
“Adaro can make a decision to convert the loan at the end of the three-year period,” the company said.
The first option will increase Adaro’s ownership in Bhakti Energi to 56% from 10.22% at present. Adaro bought a 10.22% stake in Bhakti Energi in June for $66 million from minority shareholders.
Under the second option, which also has a three-year tenure, Adaro has the right to acquire the 79.8% stake held by Bhakti’s controlling shareholders in exchange for 2.39 billion shares of Adaro Energi. The option will increase Adaro’s ownership in Bhakti Energi to 90.02%.
“Both options are only options for Adaro and not its obligations (to execute),” the company said.
Adaro said it will make no upfront payment to the controlling shareholders of Bhakti Energi and the option itself costs nothing. “We only commit funds towards the development of Bhakti Energi’s mines. During the three-year period of the option agreement, Adaro will be in full control of Bhakti Energi and its management and will fund all the costs based on a plan approved by Adaro,” it said.
Adaro President Director Garibaldi Thohir said, “Our investors should not have the perception that once the options are signed, we will immediately deploy capital to fund BEP. We are entering into these options to properly assess an opportunity, while minimizing the risk to Adaro’s capital.”.
Bhakti Energi has seven coal mining concessions in Kalimantan, which were estimated to have combined total resources of 9.582 billion metric tons of low-rank coal.
Bhakti Energi coal has a low average calorific heat value of 3,379 kilocalorie per kilogram.
“The acquisition of Bhakti Energi is part of Adaro’s strategy to create maximum long-term shareholder value from Indonesian coal based on the premise that demand for Indonesian coal will continue to be strong,” Adaro said.
Adaro is 63% owned by a group of five Indonesian shareholders–Edwin Soeryajaja, Teddy Rachmat, Boy Thohir, Benny Subianto and Sandiaga Uno–with the remaining held by the public.
-By Edhi Pranasidhi, Dow Jones Newswires; 62-21-39831277; edhi.pranasidhi@dowjones.com