Jakarta / Bloomberg
An Indonesian consortium led by veteran investment banker Agus Projosasmito is in talks to raise $1 billion of debt to back its bid for control of Newmont Mining Corp.â€™s copper operations in the country, according to the groupâ€™s financial adviser.
The investor group is in discussions with banks on borrowing $750 million in senior loans and $250 million of mezzanine debt for the asset purchase, said Shiv Dave, founder of Emindobiz, a Jakarta- and Singapore-based boutique firm hired to advise on the debt-raising. About $450 million of equity will be funded by the sponsors upon deal closing, Dave said by e- mail, adding that deal was secured out of Singapore. Newmont shares rose the most among major gold producers on Friday.
Malayan Banking Bhd.and Societe Generale SA are among banks that are in advanced talks to provide funds, according to people familiar with the matter. BNP Paribas SA and another European bank are still doing due diligence on the deal, the people said, asking not to be identified as the information is private. Dave confirmed a major global fund has also committed to provide some of the financing, without giving the name.
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 thatâ€™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.
The Indonesian consortium also includes Arifin Panigoro, the founder of energy-focused Medco Group, according to the people. The bidding group is seeking to buy a majority stake in local operating company PT Newmont Nusa Tenggara, people familiar with the matter said in January.
Newmont Nusa Tenggara owns Batu Hijau, the second-biggest copper and gold mine in Indonesia, after Freeport-McMoRan Inc.â€™s Grasberg asset, which has the worldâ€™s biggest gold reserves. 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.
Spokesmen for BNP Paribas, Maybank and Societe Generale declined to comment. A receptionist at Projosasmitoâ€™s company said he wasnâ€™t in the office, while calls to Panigoroâ€™s office went unanswered.
Newmont Mining Chief Executive Officer Gary Goldberg told a conference Feb. 29 that the company and Sumitomo are in talks with parties who have expressed â€œserious interestâ€ in the Indonesian mine, though none had yet agreed on final deal terms or secured fully committed financing. A representative for Newmont declined to comment beyond Goldbergâ€™s remarks, while a spokesman for Sumitomo declined to comment. Rizal Ramli, a coordinating minister overseeing mining in Indonesia, said in November that Panigoro plans to buy 76 percent of the mine for about $2.2 billion.
Newmont shares gained 1.5 percent at 11:32 a.m. in New York, as most members of the BI Global Senior Gold Valuation Peer Group index fell.