Nov 9, 2010

Noble, Maple, real coal agent for Berau?

Noble Group Limited, one of the world largest commodities players, has recently been appointed as the exclusive marketing agent for Indonesia's fifth larges coal miner PT Berau Coal production exported to international destinations excluding Japan and Malaysia. In 2014, Berau Coal has set a production target of 30 million metric tons
As mentioned at Noble site dated on November 8 2010,  Noble marketing agreement extends for the life of  Berau Coal assets, with Indonesian domestic sales by Berau Coal (accounting for about 30% of total production) continuing to be marketed by Berau Coal directly and with export sales to Japan continuing to be handled by Sojitz Corporation (a 10% shareholder in Berau Coal).
Noble will co-ordinate the marketing of Berau Coal product from its Singapore office and will immediately utilise its extensive global network of offices to market Berau Coal production directly to the end consumer.
Noble will be responsible for the contract management of all current and future export coal sales agreements (excluding Japan and Malaysia) and will be closely integrated with Berau Coal logistics team to provide a world class execution service.
Noble or Maple?
If you closely watch September's financial statement of PT Berau Coal Energy Tbk (BRAU) at page 70, parent company of PT Berau Coal, it was stated that Berau entered into a marketing services agreement with Maple Holdings Limited on December 30 2009.
Under the agreement, Maple has agreed to act as the exclusive marketing agent of Berau for all coal sales except those coal products which Sojitz Corporation is entitled t market and sell to customers in Japan under terms of the Japan marketing agreement.
The agreement shall become effective from December 30 2009 to December 30 19 and can be renewed for a further period of 10 years by mutual agreement. As compensation, Berau is required to pay Maple a 2% commission of the sales.
Berau Coal Energy via a wholly owned subsidiary Seacoast Offshore Inc acquired 1 share in Maple Holding, a company engaged in coal sales service, a private limited company incorporated in Labuan, from Regulus
International Pte Ltd at US$200 million.
The question is who is truly exclusive marketing agent for Berau Coal? Is it Maple or Noble? If one of them, Berau Coal Energy should clarify who is the real marketing agent. If both are mandated as exclusive marketing agents, in which market should they sell coal from Berau Coal?
Bumi & Bukit Mutiara deal
On the other hand, there was a loan agreement signed by PT Bumi Resources Tbk (BUMI) and PT Bukit Mutiara, controlling shareholder of Berau Coal Energy.
As mentioned in June 2010's financial statement page 161, Bumi Resources entered into loan agreement with Bukit Mutiara on November 2 2009.
Under the agreement, Bumi provided US$300 million loan facility to Bukit Mutiara in connection with a share sale and subscription agreement, which Bukit Mutiara was negotiating in relation to the acquisition of an indirect 90.0% interest in one of the largest coal producers in Indonesia (coal company target).
The loan is unsecured and shall be repaid in full upon its maturity in 2015. The interest rate of the loan is 12% per annum and is payable every quarter.
Here is the quote from Bumi financial statement page 162:  As one of the conditions precedent of Bumi advancing the aggregate principal amount of the loan, Bukit Mutiara has to procure that the coal target enters into an agreement with Bumi or its affiliate under which the coal company target will grant Bumi or its affiliate marketing rights over all its coal other than the coal it sells in certain countries under existing marketing arrangements. 
Any marketing arrangements which are eventually agreed between Bukit Mutiara and the coal company target would be conditional upon the successful completion of Bukit Mutiara’s acquisition of the coal company target, and such marketing arrangements will be novated to the company or one of its affiliates thereafter.
But, until now Bumi management hasn't explained and made a clear clarification regarding to the coal marketing agreement to the public. Does Bumi manage coal marketing agreement with Berau Coal via Maple? or via other affiliated SPV? Still, there is no answer.

Disclosure: No position at the stock mentioned above.

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