Kendall Court's mining compromise solution

Intrepid decided to sell, and in Singapore-based private equity firm Kendall Court it found a willing buyer.

"We had been looking at the underlying asset and when word came out there would likely be some sort of resolution and a stake may become available, we jumped at the opportunity," says Chris Chia, managing partner at Kendall Court.

This resolution involved Indo Multi Niaga (IMN), one of Intrepid's former partners, issuing a $70 million promissory note to an Intrepid subsidiary for a bond convertible into a 15% stake in Merdeka Serasi Jaya (MSJ), the holding company for the Tujuh Bukit project. The bond can be exercised once MSJ goes public, which it wants to do in the third quarter of this year. In addition, there is the right to acquire a further 7.5% stake in MSJ for $37.5 million at the time of the proposed IPO.

Intrepid has signed over these rights to Kendall Court for $40 million in cash plus a standby letter of credit also worth $40 million.

It brings to a close a chain of events that began seven years ago at a time when mining and exploration licenses could not be held by foreigners. The licenses for Tujuh Bukit were held by IMN on the understanding that the local partners would issue 80% of the shares to Intrepid. A new shareholder agreement, reflecting a relaxation in foreign investment laws in 2009, couldn't be reached and relations began to fracture.

In 2012, the licenses were transferred to a new majority shareholder in IMN, an entity controlled by Indonesian billionaire Edwin Soeryadjaya, co-founder of domestic GP Saratoga Capital. Saratoga and Provident Capital were responsible for brokering the resolution. Provident is also understood to be an investor in the business.

Chia sees their involvement as a positive development. "As with any industry that has regulation around it and involves the commodities space, you must be comfortable with your underlying partner," he says. "I have known Saratoga and Provident for 10-15 years and they provide a solid combination of execution and business sense."

Tujuh Bukit's prime asset is a copper-gold resource boasting 19 billion pounds of copper, 28 million ounces of gold and 400 million pounds of molybdenum. The in situ metal value of the second asset is said to be $100 billion.

Despite the IPO, Kendall Court plans to stick around and see some of these assets realized. "It is one of the world's top 5 untapped copper resources in terms of intrinsic value," Chia adds.

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• Topics
• Southeast Asia
• Industrials
• resources
• Indonesia
• Commodities
• Kendall Court Capital Partners