Tuesday, March 17, 2009

Indonesia's Ancora in process of acquiring five coal miners

Ancora unit may issue bonds

Ika Krismantari , The Jakarta Post , Jakarta | Tue, 03/17/2009 3:42 PM | Business

Explosives raw material producer PT Multi Nitrotama Kimia (MNK)may issue bonds to help fund the construction of a new plant.

MNK is a unit of publicly listed energy company PT Ancora Indonesia Resources.

The bond issue may worth up to US$37 million, Ancora president director Usman H. Darus said Monday, and aims to help finance the $60 million new plant designed to boost MNK's production capacity.

Usman added the construction of the new plant was part of Ancora's long-term expansion drive.

Ancora is also in the process of acquiring five coal miners.

Usman said the acquisition deals, which could involve investment of up to US$100 million and be completed by May, were aimed at helping the company boost its coal reserves to anticipate estimated higher demand in the future.

"Even now, there are new buyers from China and Mexico who are willing to buy coal from us at market prices," he said.

"But due to limited reserves, we do not dare strike deals with any of them."

He added the Chinese and Mexican buyers were the next potential buyers of the company's coal, adding to its list of existing customers who are mainly from Malaysia and Japan.

The Malaysian and Japanese buyers have signed five-year contracts with Ancora for the delivery of up to 13 million tons of coal annually. The contracts were signed at below market prices.

Usman said the potential buyers from China and Mexico had ordered up to 840,000 tons of coal per year.

To try to meet those demands, Ancora vice president Teddy K. Somantri said the company was vying for the five coal companies, with total reserves of 24 million tons in South Kalimantan and West Kalimantan.

"We are still waiting for due diligence reports from our geologists in the fields," he said.

Jakarta-based Ancora is a subsidiary of investment and buyout company Ancora Capital Management Limited, founded by JPMorgan alumnus Gita Wirjawan.

Ancora Capital, which has so far managed to raise $300 million in funding from Muslim investors in Brunei, Malaysia and the Middle East, is Indonesia's first sharia-compliant private equity fund.

Ancora Indonesia has recently taken over a 40 percent stake in MNK, which controls around 70 percent of the country's market share for explosive materials.

Ancora Indonesia is among the handful of local companies now seeking business opportunities in the country's lucrative coal sector.

Gita, co-chairman of Ancora Capital, said recently the company would keep focusing on the natural resources business because of its good prospects for the future, adding it had embarked on a series of measures to cement its expan-sion drive.

Last September, Ancora Capital, in cooperation with PT Mitra Rajasa, acquired a controlling ownership in oil-drilling and logistics firm PT Apexindo Pratama Duta, in a deal estimated to be worth $182 million.

The following month, it bought a 5 percent stake in giant coal producer PT Bumi Resources at around $75 million from JPMorgan, which was holding the shares as collateral against loans taken out by the Bakrie Group of Companies.

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