Tata to buy Indonesian coal companies

Tata to buy Indonesian coal companies

India’s private major Tata Power says it has plans to buy stakes in two Indonesian coal firms owned by Pt Bumi Resources.

The company said it will invest $1.1 billion to buy 30 percent in each of the two companies. The company will set up an offshore special-purpose vehicle for the acquisition.

“We have not yet finalized financial strategy for the equity purchase,” said Prasad R. Menon, managing director of Tata Power.

He said the SPV would raise about 50 percent to 70 percent of the investment through debt in a foreign currency, The Business Line newspaper reported Tuesday.

The two Indonesian coal companies, PT Kaltim Prima Coal and PT Arutmin, are among the top three global thermal coal export companies.

“We have also signed a pact with KPC, which could purchase 10 million tons of coal annually,” Menon said.

He said these decisions were likely to meet Tata’s coal requirement by 50 percent from 2011.

He said the acquisitions would also help the company gain an edge against coal price movements.

“We will be getting closer to the business of coal mining,” Menon said.

Menon said Tata Power would expand its generation capacity by 10,000 megawatts during the next five years.

Information from: www.upi.com

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