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ublicly listed energy and infrastructure company PT Dian Swastatika Sentosa (DSSA) will let go of control over coal miner PT Golden Energy Mines (GEMS) in a share swap deal that allows the company to hold a controlling stake in Singapore-based United Fiber System Ltd (UFS).

DSSA said in a disclosure submitted to the Indonesia Stock Exchange (IDX) on Monday that it signed on June 29 a share purchase agreement with UFS about the ownership in GEMS. The agreement also involved another shareholder of GEMS; GMR Coal Resources
Pte. Ltd.

Under the agreement, UFS will take over 66.99 percent stake in GEMS from DSSA and another 30 percent from GMR.

According to UFS’s disclosure on the Singapore Exchange (SGX), the share swap deals are estimated to be worth S$1.55 billion (US$1.22 billion) for DSSA and S$693.87 million for GMR.

UFS will pay the stake by issuing 2.21 billion new shares for DSSA and 991.25 million new shares for GMR Coal. The number of shares will be equal to 65.21 percent and 29.2 percent of UFS’s enlarged capital for DSSA and GMR Coal
respectively.

“We are estimating that the deal will be closed in December or before January 31, 2013, at the latest. We still have to process the plan in the bourses (IDX and SGX) and also Bapepam-LK (Indonesia’s Capital Market and Supervisory Agency),” DSSA director and corporate secretary Hermawan Tarjono said on Monday.

DSSA is also planning to seek approval from its shareholders in an extraordinary meeting scheduled on October 24. The company is currently 59.9 percent owned by PT Sinar Mas Tunggal, which is controlled by Sinar Mas Group, and 40.1 percent by the public.

Hermawan said that the deal would allow DSSA to raise funds from investors and other financial institution in Singapore to develop its business.

“We will continue to develop the coal mining business of GEMS. It is also likely that we can perform acquisitions of mining sites through UFS,” Hermawan said.

GEMS is a holding company, which has 12 subsidiaries. About 10 of the total subsidiaries are running thermal coal mining business in various sites nationwide with a total area of about 57,000 hectares.

According to its website, UFS — founded in 1995 — is a company operating in the forestry and pulp business, in which the company has three subsidiaries based in Indonesia. The subsidiaries are PT Hutan Rindang Banua — which has forest concession rights to 268,585 hectares in South Kalimantan, PT Mangium Anugerah Lestari — which is based in Pulau Laut, South Kalimantan and operates wood chip with annual production capacity of 700,000 bone dry tones and PT Marga Buana Mulia — which operate pulp mills with annual production capacity of 600,000 air dry tones.

Despite difference in business line, UFS said that the acquisition will be benefit for the company.

“The board is of the view that the proposed DSSA acquisition, the proposed GMR acquisition and the resultant refocusing of the company (UFS) on coal mining is appropriate given the growth opportunities that they offer. The board believes that the proposed DSSA acquisition and proposed GMR acquisition would enhance shareholder value for the company as well as strengthening the balance sheet. The acquisition of a viable operating business will also provide the company’s access to financial resources required to a turnaround of its existing business relating to its forestry asset,” UFS said in a written statement.

Shares in DSSA were unchanged at Rp 14,000 a piece on Monday. Shares in GEMS closed at Rp 2,575 a piece on Monday, declining slightly by 1.9 percent compared to Rp 2,625 on last Friday.