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Iron ore miner and heavy equipment distributor PT Minang
Jordanindo has acquired PT Kutai Timur Energi's five percent stake in
East Kalimantan-based coal mining firm PT Kaltim Prima Coal (KPC) for
about US$62 million.
PT Kutai Timur Investama (KTI), an investment firm owned by East
Kalimantan's East Kutai regency administration, said that it had sold
its shares in KPC due to a company decision to focus on other business
sectors.
KTI's president director Anung Nugroho said that the money earned from
the sale would be invested in a number of prospective business sectors,
including the mining, plantation and power generation sectors.
"There will be a shareholders meeting soon to discuss how the money
will be used. But there have been discussions on investing it in
expanding the regency's palm oil production," said Investama president
director Anung Nugroho.
He also said there were a number of investors, including the country's
largest cigarette producer, PT Gudang Garam, and a Malaysian firm, that
were interested in collaborating with KTI on the expansion of its
plantation business.
"The administration itself plans do establish its own mining firm to
take the advantage of the province's massive coal reserves," he said.
Anung said that the money could also be used to finance infrastructure
projects in the regency, such as power plants and coal-shipment
terminals.
There was also the possibility of investing it in central bank bonds
with the aim of strengthening the financial capabilities of local banks.
Another key reason for selling its shares in KPC, Anung said, was that
the regency would benefit more from investing in other businesses as
compared with the gains to be made by continuing to hold the shares.
The regency has been receiving US$1.5 million annually in dividends
over recent years.
"The amount of the dividend can change depending on the decisions made
by the annual shareholders meeting. So, there is a possibility that we
might not receive it next year," he said.
"On the other hand, this is a good time to sell off our stake. We
obtained a premium price for the shares," Anung explained.
KPC is controlled by PT Bumi Resources, part of the Bakrie Group, which
holds a 95 percent stake. The company had planned to sell its stake in
KPC, together with those in other coal producers, including PT Arutmin
Indonesia, to a consortium of local companies led by PT Renaissance
Capital for $3.2 billion. The massive transaction was canceled,
however, due to differing valuations of the two companies' total assets.
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