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T Saratoga Power, a part of Saroga Capital, has agreed to acquire a majority stake in PT Medco Power Indonesia, a subsidiary of publicly listed energy company PT Medco Energi Internasional Tbk.

As part of an agreement signed in Jakarta on Thursday, Saratoga Power agreed to pay US$112 million to buy 51 precent of Medco Power’s shares, comprising $87 million paid on Friday and $25 million to be paid in January.

Medco Energi president director Lukman A. Mahfoedz said that the divestment in Medco Power would reduce the company’s revenues.

“Medco Power is carrying investment measures to boost its operations to catch up with about 10 percent growth in electricity needs in Indonesia. The divestment will indeed reduce our consolidated net income by only about 2 percent per year,” Lukman said on Friday.

Medco Power president director Fazil Alfitri said that his company contributed about 20 percent of Medco Energi’s revenue.

Medco Energi booked net profits of $20.3 million in the first nine months of the year, up 12.8 percent from $18 million in the same period last year.

Its revenues stood at $850.5 million as of the third quarter, surging 34.4 percent from $632.8 million in the same period last year.

“Medco Power has reached Rp 900 billion [$99.1 million] in revenue year to date and hopes to reach about Rp 920 billion by the year end. Our EBITDA [earnings before interest, tax and amortization] has reached $23 million,” Fazil said.

“Next year, we hope to reach Rp 1.4 trillion in revenue and $31 million in EBITDA,” he added.

Fazil said that Medco Power planned to set aside between $500 million and $600 million in the next five years for capital expenditures to finance development projects to increase the capacity of the company’s power plants.

Currently, Medco Power runs gas-powered power plants in Panaran in Batam and South Sumatra with a total capacity of 250 megawatts.

Fazil said that Medco Power aimed to run additional power plants to obtain a total capacity of 1,000 megawatts by 2015.

Medco Power would disburse about $200 million in capital expenditures next year to develop existing gas-powered power plants in Batam, build one 30-megawatt and one 70-megawatt power plant in Batam and to build other power plants in Central and West Sulawesi, Fazil said.

“We will also develop mini-hydro power projects in 13 sites in West and Central Java,” he said.

Medco Energi International said earlier that it will allocate up to US$356 million for capital
expenditure in 2012, to finance exploration and development of new oil and gas fields in the country and overseas.

“We have arranged to spend $1.2 billion next year; $356 million of which will be used as capital expenditure and the $818 million as operating expenses,” Lukman said during his company’s public expose on Thursday.

Director of finance Syamsurizal Munaf said that the company would use internal cash and standby bank loans to support the capital expenditure.

“As of today, our cash stands at more than $500 million. We also still have credit facilities from Bank Mandiri, BNI and BRI. Half of the capital expenditure will be funded from our internal cash and the other half will come from the banks,” Syamsurizal said. According to figures available at the public expose, Medco has standby loans from BNI worth $140 million, from Bank Mandiri $100 million and from Bank BRI $150 million.