Alfian , The Jakarta Post , Jakarta | Mon, 07/13/2009 11:26 AM | Headlines
PT Multicapital, a subsidiary of mining giant PT Bumi Resources, has won a tender to finance the acquisition of 10 percent of shares in PT Newmont Nusa Tenggara (NNT).
A consortium of three regional administrations in West Nusa Tenggara province announced Sunday that of all six contenders, Multicapital had "the highest score in all criteria".
The consortium - comprising the provincial, Sumbawa regency and West Sumbawa regency administrations - will need US$391 million for the share acquisition, as previously agreed with NNT.
"Multicapital will finance all the required costs," Heryadi Rahmat, head of provincial energy and mineral resources office, said Sunday.
He added one of considerations in appointing Multicapital was because its parent company, Bumi, had a core business in mining.
US mining giant Newmont Corp, NNT's main shareholder, must gradually sell a total of 31 percent of its stake in the company to the government by 2010, or to local parties designated by the government, based on a 1986 contract.
An arbitration panel reinforced this contract on March 31, stipulating Newmont had to sell a 17 percent stake in NNT within 180 days of the panel ruling, with 10 percent of those shares being divested to the three regional administrations.
The central government is in talks with Newmont over the possibility of buying the remaining 7 percent stake, and is expected to clinch this week a deal with the company over the share price.
Multicapital is also interested in financing the acquisition by the central government, Heryadi said.
In return for the financial support for the regional governments, Multicapital has proposed an annual dividend split that would run until all existing working contracts for various mining concessions currently controlled by NNT expired.
Among the contracts is one for control of the country's largest copper mine, Batu Hijau, which will expire in 2017.
"Multicapital has proposed a dividend split of 75 percent for them and 25 percent for the regional administration," Heryadi said.
The final decision on the dividend split will be made within two weeks.
On the technical aspects of the financing, Heryadi said the three regional administrations would form a joint venture with Multicapital to provide financial support to another joint venture by the regional administrations to carry out the acquisition, PT Daerah Maju Bersama.
Marwan Batubara, a member of the Regional Representatives Council (DPD), warned the regional administrations not to repeat the mistake by Bojonegro regency in East Java in the management of the Cepu oil and gas block.
"Under the agreement, the government only receives 25 percent of the revenue split, while the company receives the remaining 75 percent," Marwan pointed out.
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