Mining Giants Submit Bids For PT Berau Coal

China's Huaneng Power and Indonesia's PT Indika Energy are among the companies that have submitted bids for a majority stake in Indonesian coal miner PT Berau Coal, according to sources, in a deal that could value Berau at more than $1 billion.

Thailand's top coal miner Banpu may also bid for the stake while mining giants Xstrata and Peabody Energy have previously expressed interest in the stake.

"We are just like the others, which have been approached by financial advisers and we are in the process of considering," Banpu chief executive Chanin Vongkusolkit told Reuters.

Sources said Berau -- Indonesia's fifth-largest coal miner -- has generated strong interest as it is rare for controlling stakes in Indonesian energy firms to be put on the market. The stake offers a steady supply of quality Indonesian thermal coal.

Berau, which has a 1,200 square km (460 sq mile) concession area in East Kalimantan province, produced 13.2 million tonnes of coal in 2008 and aims for production of 15 million tonnes this year.

Armadian Tritunggal -- an investment firm controlled by Indonesian businessman Rizal Risjad -- is selling its 51 percent controlling stake in Berau.

The sale is being run by Deutsche Bank, Bank of America's Merrill Lynch, and former Merrill banker Sheldon Trainor's PacBridge Capital Partners.

Armadian Tritunggal may elect to keep a portion of its controlling stake, a source had previously told Reuters.

"The asset will probably go to a strategic buyer either as a complete buy-out or a large minority stake," said a source familiar with the auction.

It was unclear whether Xstrata and Peabody Energy had submitted bids, which sources said were due a few weeks ago.

Berau is a joint venture between Tritunggal, Dutch firm dan Rognar Holding B.V. and Japanese firm Sojitz Corp, with Rognar and Sojitz owning 39 percent and 10 percent stakes.

The sale by Berau's biggest stakeholder could also trigger the sale of stakes by its minority shareholders. The total value of the company is expected to be worth more than $1 billion.

Berau is also being assessed for a possible initial public offering and the due diligence should be completed by the end of June, president director Bob Kamandanu told Reuters in May.

IPO plans will be included as part of any deal to sell the majority stake, sources said.

Further complicating the deal is an outstanding $300 million high-yield bond arranged by Merrill Lynch, sources have said.
Indika tapped Citigroup to advise on its bid, two of the sources said. Huaneng Power is being advised by Nomura, the sources said.

The sources declined to be named because they are not authorised to speak publicly about the auction.

Source: Reuters