Appointments to Delta Dunia’s Board Reveal Northstar’s Role in Buma Bid

Aditya Wikrama & Janeman Latul

Private equity firm PT Northstar Pacific Partners finally revealed it had a hand in property firm PT Delta Dunia Makmur’s planned takeover of a large coal contractor on Wednesday, when two Northstar executives were voted on Delta Dunia’s board.

Delta Dunia shareholders approved the inclusion of Ariani Vidya Sofjan as a commissioner and Lukman Tirtaguna as a director. Both are said to represent Northstar.

The move appears to confirm reports that Northstar Pacific, a private equity firm, is behind the tiny listed property firm’s plan to buy the country’s second-largest coal contractor, PT Bukit Makmur Mandiri Utama (Buma). Buma currently has a 19 percent market share in the contracting business.

The Jakarta Globe last month reported that after buying Buma, Northstar could end up with a controlling interest in Delta, a scenario that Delta management later denied. “So far, we don’t have such a scenario,” said Ricardo Wirjawan, Delta’s corporate secretary, on Sept. 24.

Northstar executives did not respond to Jakarta Globe’s requests for comment. On Wednesday, Ricardo confirmed that Northstar did have a stake in the company, but refused to disclose the percentage. “It is the authority of the shareholder [Northstar] to announce this,” he said.

One source told the Jakarta Globe that the Northstar stake in Delta may be as much as 45 percent. Asked why Northstar would use Delta Dunia to buy Buma instead of opting for a straight purchase, Edwin Sinaga, president director of PT Finacorporindo Nusa, said Northstar could raise more capital by using a listed firm.

“The process of acquiring Delta Dunia also lacks transparency,” Edwin said.

To finance Buma’s acquisition, Delta Dunia has appointed Singapore-based Barclays Capital to raise $210 million to buy 99 percent of Buma stakes.

“It could be either loans, bonds or a combination of both,” Ricardo said in September.

Ricardo hoped the fund raising for the purchase will be completed by mid- or late October this year. To complete the acquisition, Buma will also need to refinance its $310 million debt, with Barclays conducting a road show to market the loans or bonds in the United States, the result of which will be announced later next month.

If Northstar does purchase Buma through Delta Dunia, it will be the company’s latest large acquisition in the past few months, after the company’s acquisition of cellular phone manufacturer PT Trikomsel, and planned the partnership with Saratoga Capital to purchase 37.5 percent of the oil and gas contractor, PT Elnusa.

Northstar has also been involved in debt restructuring with another large coal company, the Bakrie group’s Bumi Resources worth $479 million. The restructuring could see the company end up with a sizable stake in Bumi, if the company is unable to pay its debt to Northstar.