PT Adaro Energy Tbk is delighted to announce that on May 28th, 2012 in Jakarta, it entered into an option to provide a convertible loan for a period of three years to acquire a controlling interest in coal miner PT Bhakti Energi Persada and an option to acquire the majority shares from the controlling shareholders of BEP. Adaro Energy will have full control of the management, operations and all the funding of BEP from the date of the signing of the Options.
Mr Garibaldi Thohir President Director said "We are delighted with the BEP Options we have signed. We feel BEP has excellent potential to help us achieve our main goal of generating substantial sustainable long-term value from Indonesian coal. We worked for two years to negotiate a deal that is structured in a unique way to minimize risk to Adaro. While we are excited with the BEP opportunity, we must also emphasize that we will use our best judgment before injecting any funds to develop the asset."
Key success factors such as market readiness, receiving required permits from the government, land availability, social and community support, and completing engineering and geological studies must first be in place before any large capital expenditures will be deployed.
President Director Mr Thohir added that "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. We want to ensure both the acquisition risks and the execution risks are addressed well in advance."
BEP which was established in 2002, owns seven low grades thermal coal licenses in the District of Muara Wahau, East Kutai Regency, East Kalimantan. BEP also owns two transport businesses in East Kalimantan, which own the hauling road that will be used to transport BEP's coal to the seashore. The seven concessions form one very large contiguous thermal coal deposit.
SRK Consulting Pty Ltd estimated BEP's concessions to have JORC compliant total resources of 9.53 billion tonnes. In 2010, Adaro Energy hired Marston, an international mining consultant firm out of St Louis Missouri, USA, to conduct a mining and development study, which verified certain technical assumptions used by SRK in their 2008 and 2009 JORC resource reports.Marston's estimate of insitu coal tonnages was essentially the same as the SRK estimate as the difference was within acceptable limits.
The Option Agreements give Adaro Energy two options to acquire BEP. It is a unique structure designed to minimize the risk to Adaro Energy. Option One provides Adaro the option to lend up to USD 500 million to acquire 51% equity in BEP over a period of three years. Adaro can make a decision to convert the loan into equity at the end of the three year period.
Option Two also has a three year maturity and was signed with PT Persada Capital Investama, PT Triputra Investindo Arya and the descendants of the late Mr. Winarto. PCI and TIA each have a 30.787% stake in BEP and combined with the 18.216% Winarto family stake, own 79.8% of the equity of BEP. Option Two provides Adaro a right to acquire shares held by the controlling shareholders of BEP in exchange for 2,381.7 million shares of Adaro Energy. Both Options are only options for Adaro Energy and not its obligations.
PCI and TIA are owned by two of Adaro Energy five key shareholders, Mr Benny Subianto and Mr Teddy Rachmat. Adaro Energy is 63% held by five key shareholders and no single shareholder has a controlling interest of Adaro Energy. In June 2011 in an unrelated transaction, Adaro Energy acquired 10.22% of BEP for USD 66 million from third party minority holders.
Source - PT Adaro Energy Tbk
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