Singapore – 8 September – LAWFUEL – The Law News Network – International law firm Sidley Austin Brown & Wood LLP recently represented Merrill Lynch & Co., as joint lead manager and sole book runner, in connection with the successful completion of a US$600 million future flow securitization of coal export receivables for PT Kaltim Prima Coal and PT Arutmin Indonesia, two subsidiaries of major Indonesian energy group PT Bumi Resources Tbk.
The two mining companies produce prime quality coal from mines in the Province of Kalimantan under concessions granted by the Government of Indonesia. On a combined basis, the two companies were the largest coal producers and exporters in Indonesia in 2004.
The transaction is significant in many respects: the first cross-border securitization from Indonesia and the reopening of a market which has been inactive since the Asian financial crisis of 1997, the largest non-sovereign deal from Indonesia, and the first stand alone cross-border future flow securitization in Asia to receive an investment grade rating.
A key aspect of this deal is its novel structure, which is of interest to regional commodity producers. Edward D. (Tod) Eddy, III, the Singapore-based partner who led a world-wide team of Sidley Austin Brown & Wood lawyers advising on the transaction, explained, “The transaction structure incorporates an offshore collection system which aligns the interests of key suppliers with the interests of investors. The structural protections allowed the rating agency to assign a rating above that of the sovereign and the individual corporate ratings.”
Thomas Albrecht, co-chair of Sidley’s Global Securitization group, commented, “Our firm fielded a team of lawyers from around the world to execute this transaction. We are pleased to have had the opportunity to work with Merrill Lynch in bringing this landmark transaction to the international capital markets.”
The Series 2005-1 Notes were assigned a BBB- rating by Fitch, Inc. and have a final maturity date of July 2012.
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