Indonesian Group Said to Prepare $2 Billion Newmont Mine Bidby , , and
Former investment banker, Medco Energi line up bank financing
Indonesian consortium could make offer within next week
An Indonesian consortium led by veteran investment banker Agus Projosasmito is preparing to offer about $2 billion for control of Newmont Mining Corp.’s operations in the country after lining up bank financing, people with knowledge of the matter said.
The investor group plans to bid for about 80 percent of local operating company PT Newmont Nusa Tenggara over the next week at the earliest, the people said, asking not to be named before an announcement. It is poised to borrow about $1 billion from banks including BNP Paribas SA, Malayan Banking Bhd. and Societe Generale SA, as well as state-owned lenders PT Bank Negara Indonesia and PT Bank Mandiri, according to the people.
PT Medco Energi Internasional, the Jakarta-listed oil and gas producer founded by businessman Arifin Panigoro, would be a shareholder of Newmont Nusa Tenggara together with Projosasmito after the planned purchase, the people said. As part of the deal, the investor group will offer to buy the 24 percent stake in the Newmont operations held by the Bakrie family’s PT Bumi Resources Minerals, according to the people.
Newmont is seeking to sell its local business after Indonesia banned raw ore shipments in January 2014 and put a progressive tax on concentrates, a semi-processed ore that’s shipped to smelters for processing into finished metal. The move is part of a wider policy to boost revenue by turning the country into a manufacturer of higher-value products and encourage construction of domestic smelters and refineries.
Medco shares have jumped 81 percent since the start of the year, outpacing the 5.4 percent rise in the benchmark Jakarta Stock Exchange index. The stock fell 4 percent on Friday, giving Medco a market value of 4.8 trillion rupiah ($357 million).
Projosasmito has more than 30 years experience in the Indonesian capital markets, including stints as president director of local brokerage PT Danareksa Sekuritas and president commissioner of Jakarta-based PT Nusantara Capital Securities, according to a biography on Nusantara’s website. He is now the founder and chief executive officer of coal miner PT Ithaca Resources.
Newmont Nusa Tenggara owns Batu Hijau, the second-biggest copper and gold mine in Indonesia, after Freeport-McMoRan Inc.’s Grasberg asset, which has the world’s biggest gold reserves. The open-pit Newmont mine, whose name means “green rock” in Bahasa Indonesia, was discovered in 1990 in the southwest region of Sumbawa island.
Other banks may join the financing later, according to the people. Details of the transaction haven’t been finalized, and there’s no certainty a firm offer will result, the people said. Newmont Mining owned 31.5 percent of its Indonesian operations at the end of September last year, with other stakes held by Japanese trading house Sumitomo Corp. and local investors, according to a quarterly report.
“Medco is in talks with various parties, and we are in the process of acquiring some major asset in Indonesia,” President Commissioner Muhammad Lutfi said by phone Friday, declining to comment on the identity of the target. A spokesman for Newmont said by e-mail that the U.S. miner and Sumitomo are in discussions with certain interested parties, “but to date, none has secured fully committed financing or final deal terms.”
A receptionist at Projosasmito’s company said he wasn’t in the office. An investor-relations official at Bumi Resources Minerals and a representative for Maybank didn’t immediately respond to e-mails seeking comment. BNI Corporate Secretary Suhardi Petrus said he couldn’t immediately comment. Spokesmen for Societe Generale and Sumitomo Corp. declined to comment, while a representative for BNP Paribas said she couldn’t provide immediate comment.
“Medco is indeed our customer, but we can’t comment on its plan for the Newmont acquisition because it is their corporate action,” Bank Mandiri Corporate Secretary Rohan Hafas said by phone Friday.