Indonesia's Toba Bara to sell 61.79% of its unit to Singapore's Highland Strategic

Coal producer PT Toba Sejahtera has announced plans to divest 61.79 per cent of ownership in its publicly-listed subsidiary, PT Toba Bara Sejahtera Tbk (TOBA), to Singapore-based Highland Strategic Pte Ltd. The value of this transaction is estimated to reach Rp1.2 trillion ($90 million), based on Toba Bara’s share closing price on Monday’s trading at Rp1,000 per share.

President director of Toba Bara, Justaina Naiborhu, said the company had signed the sale agreement with Highland Strategic back in early November.

“Parties involved in the transaction are not affiliated,” Naiborhu said in a statement.

Toba Sejahtera currently holds 71.70 per cent shares in Toba Bara. Bintang Bara BV owns the remaining 10 per cent, while PT Bara Makmur Abadi and PT Sinergi Sukses Utama control 6.25 per cent and 5.1 per cent, respectively.

Toba Bara is owned by one of Indonesia’s most powerful politicians Luhut Binsar Panjaitan. Up until September, it produced about 4.2 million tonnes of coal. Revenue was recorded at $192.1 million, while net income reached $9.7 million. In the period of January to September, Toba Bara disbursed $8.6 million in capital expenditure (capex), including for the PLTU project. The figure is expected to surpass $10 million by the end of this year.

The company has planned to diversify its business to the electricity sector. This part of the firm’s strategy to balance against the downward trends in global coal prices over recent years. It recently signed a 25-year power purchasing agreement (PPA) contract for the Sulbagut-1 coal-fired power plant with state-owned firm Perusahaan Listrik Negara (PLN).

Sulbagut-1 power plant, designed to have a capacity of 2×50 MW, is estimated to have a value of up to $220 million. It will be located in North Sulawesi and is expected to begin construction in July 2017.