IPO Newmont delay

Gold miner Newmont Nusa Tenggara’s long-delayed initial public offering is not likely to happen this year as the problematic divestment process has prompted the company to re-evaluate the terms of the IPO.

NNT had prepared its financial report for the IPO, planned for last year, but the delay in the divestment process has hampered us. We have to review the plan again, and this takes time.

Necessary preparations include asset calculation, appointment of underwriters and the IPO’s time of sale and its marketing strategy.

The Finance Ministry has urged the Energy Ministry to immediately approve the government’s purchase of a 7 percent stake, which is the last remaining set of NNT shares to be divested so the company can proceed with its IPO.

Under the fourth generation of its working contract with the government, NNT is required to divest 51 percent of its foreign-owned shares to Indonesian entities by 2010. Indonesian companies now own 44 percent of the miner. The ministry’s recommendation of the sale of the 7 percent stake will be submitted to NNT’s parent company — Colorado-based Newmont Mining — and the Investment Coordinating Board (BKPM).

In 2008, Newmont Mining and Sumitomo of Japan sold their combined 24 percent stake to Multi Daerah Bersaing, a company owned by Bumi Resources’ Multicapital. MDB purchased the divested shares in coordination with the West Nusa Tenggara, Sumbawa and West Sumbawa administrations. Pukuafu Indah, a local firm owned by businessman Jusuf Merukh, owns 17.8 percent in NNT, while another local company, Indonesia Masbaga Investama, owns 2.2 percent.

NNT’s management had planned to hold the IPO in the second half of this year, selling a 10 percent stake to the public in a bid to raise $500 million as it expected the delayed divestment process would be completed by mid-April. However, the fate of the last 7 percent was ensnared in political controversy after lawmakers rejected a plan by Finance Minister Agus Martowardojo, who represents the government, to purchase the shares.

A sales purchase agreement, which valued the stake at $246.8 million and represented a 10 percent discount from the initial valuation, had been signed in May. The money has yet to be paid, though, pending endorsement from the Energy Ministry and clearance from the BKPM.