JAKARTA (TheInsiderStories) – Indonesian integrated energy company PT Indika Energy Tbk (IDX: INDY) has become a majority shareholder in PT Kideco Jaya Agung, its unit. On Sept. 22, the company and its wholly-owned subsidiary PT Indika Inti Corpindo entered into separate Share Purchase Agreements to acquire 45 percent of Kideco shares.
Based on an Indika’s press statement dated Sept. 25, the Company is to purchase 40.0 percent of Kideco from Samtan Co., Ltd and another 5.0 percent from PT Muji Inti Utama, for an aggregate total consideration of US$677.5 million.
Following these deals, Indika will become the majority shareholder, with 91.0 percent equity ownership, while Samtan will retain a 9.0 percent stake. Indika has built an integrated business portfolio in energy resources, services, and infrastructure.
“With its substantial coal reserves, resources, and operational excellence, Kideco will continue to serve as Indika Energy’s sustainable growth foundation. This transaction will further strengthen Indika Energy’s position in the energy business value chain” commented Arsjad Rasjid, President Director and Group CEO of Indika.
With the assumption of control of Kideco, Indika will further enhance synergies within its group subsidiaries, such as its contract mining company, PT Petrosea Tbk (IDX: PTRO) and coal transportation and logistics company PT Mitrabahtera Segara Sejati Tbk (IDX: MMBS).
The transaction is expected to be completed by the fourth quarter of 2017, subject to satisfactory fulfillment of the terms and conditions, as well as regulatory approvals set out in the Share Purchase Agreements.
Kideco is the third-largest coal producer in Indonesia, and is located in East Kalimantan, over an area of 50,921 hectares; it has pocketed mining permits that extend until 2023. Kideco has five concession areas with potential coal reserves proven to reach 422 million tons, and resources reaching 1.37 billion tons.
Kideco currently has an installed production capacity of 55 million tons per year, although last year it turned out only 32.1 million tons. In addition to Kideco, INDY also produces coal through PT Santan Batubara, PT Multi Tambangjaya Utama and PT Mitra Energi Agung.
PT Indika Capital Investment Pte Ltd. Is a subsidiary of the coal trading company, along with PT Tripatra Engineers and Construction and PT Tripatra Engineering for EPC.
Besides MBBS, PT Sea Bridge Shipping, PT Cotrans Asia, PT Indika Logistic and Support Services, and PT Kuala Pelabuhan Indonesia are committed to the energy infrastructure business. INDY recently entered the electricity sector, through PT Cirebon Electric Power and PT Prasarana Energi Cirebon.
In April, Indika successfully issued 5-year bonds totaling $265 million, with a coupon of 6.875 percent, and a redemption (reoffer yield) of 6.950 percent.
This transaction marks Indika Energy’s return to the primary debt capital market; four years ago, in January 2013, it issued a 10-year high-yield tenor bond (10NC5) of $500 million from its mining companies, with the lowest returns in Southeast Asia for the last five years. Through this transaction, Indika will refinance the bonds maturing in 2018, and extend the average age of the debt maturity.
Throughout first half (1H) of 2017, Indika recorded $453.0 million in revenue, an increase of 27 percent compared to $356.6 million for the same period of 2016. This mainly derived from Petrosea revenues increasing 22.4 percent, the result of increased overburden removal volume from Tabang and Kideco Jaya Agung projects.
Further, Tripatra revenue increased 25.6 percent, with a contribution to EPC onshore at the Tangguh expansion project (LNG Train 3) and from BP Berau. Other than that, coal trading revenues jumped 55.4 percent, due to higher coal prices.
Meanwhile, Net Profit increased dramatically, at 179.2 percent, to $73.3 million, thanks to the contribution of Kideco Jaya Agung coal producer, which recorded an improved average selling price.
Writing by Linda Silaen, Email: email@example.com