Vallar Plc Announcement to London Stock Exchange

VALLAR PLC

16 November 2010

Source: vallar (klik here for information detail).

Vallar Plc ("Vallar" or the "Company") announces acquisition of holdings in
PT Bumi Resources Tbk ("Bumi") and PT Berau Coal Energy Tbk ("Berau")

Creation of London‑listed Indonesian coal champion

·      Vallar to purchase 75% of Berau and 25% of Bumi

·      Consideration of approximately US$3.0 billion made up of a combination of cash and new Vallar Shares

·      Significant benefits identified for stakeholders in each of Bumi, Berau and Vallar through:

-       maximising the potential of the largest coal producing assets in Indonesia

-       leveraging management experience, industry relationships and access to capital

-       exposure to the largest and fifth largest Indonesian coal producers by production (78Mt in 2010) with a significant resource base (12bn^{1, 2} tonnes in aggregate) and track record of profitability (EBITDA of US$350m³ and US$1,431m⁴ for Berau and Bumi respectively for last twelve months)

·      Exposure to the fast growing Indonesian and pan-Asian region

·      Intention to seek a Premium Listing on the Official List of the Financial Services Authority and trading on the Main Market of the London Stock Exchange and, subject to applicable laws, explore a potential listing on the Indonesia Stock Exchange

·      Collaborative partnership with two of Asia's most dynamic business families

·      Mandatory offer to be made to the minority shareholders of Berau and intention to increase ownership in Bumi during 2011

·      The Board of Directors of Vallar will be led by Indra Bakrie and Nathaniel Rothschild and will have a strong Indonesian presence. Vallar's existing board representatives will remain (with the exception of Robert Sinclair) and the Company will have a majority of Independent Non-Executive Directors. Sir Julian Horn-Smith is to be appointed as Deputy Chairman and Senior Independent Non-Executive Director

·      Bakrie Group will be the largest combined shareholder in Vallar with 43.0%⁵ of Vallar Shares and will have the right to nominate three directors including the position of Chairman, Chief Executive Officer and the Chief Financial Officer and will continue to control the management, operations and policy of Bumi

·      Consistent with Vallar's stated strategy at the time of its initial public offering ("IPO")

·      Vallar Plc will be renamed Bumi Plc

1 Aggregate of 100% of Berau and Bumi.

2 Measured, Indicated and Inferred resources

3 Based on 100% of the annualised Berau unaudited Indonesian GAAP financials for the year ending 30 September 2010

4 Based on 100% of the Bumi annualised unaudited Indonesian GAAP financials for the year ending 30 June 2010

5 Voting interest limited at 29.99% with balance held in Suspended-voting Ordinary Shares

Vallar today announced its intention to create a London-listed Indonesian resources champion through the proposed purchase of 25% of Bumi and 75% of Berau for a combined consideration of approximately US$3.0 billion. The Transactions will bring together significant holdings in Indonesia's largest and fifth largest coal producers by production and resource base and will create a diversified international mining company built around a significant project pipeline of base metals and other minerals. 

The potential of the proposed Acquisition represents the delivery of the Vallar strategy announced at the time of its IPO to seek to create shareholder value through establishing a business with significant operations in the global metals, mining and resources sector with the intention of increasing its scale and profitability by efficiently deploying capital to expand and enhance current operations and by recruiting and retaining experienced and specialist industry personnel for key management positions.

Commenting on the proposed Acquisition:

Indra Bakrie, proposed Chairman of Vallar, said:

"Today's announcement will bring together the world class assets of both Bumi and Berau to create an Indonesian global mining champion and the only major Indonesian company to be listed on the London Stock Exchange. This will enhance our international profile, provide a currency and platform for development in the region and puts us in a much stronger position to build on the organic growth that our combined assets already provide.  As a result, we expect to unlock significant value for shareholders."

Nathaniel Rothschild, proposed Co-Chairman of Vallar, said:  

"We are delighted to have taken this important step to deliver on the strategy that we set out at the time of Vallar's IPO in identifying and acquiring these attractive assets. The structure that we established through the IPO has enabled us to act quickly to secure these high quality assets, which we believe will create value for our shareholders.  I am also particularly pleased to be welcoming to the Board representatives of two such dynamic Asian business families and look forward to developing our strategy with them over the coming years." 

Ari Hudaya, proposed Group CEO of Vallar, said: 

"It is a very exciting time to be a mining company in Indonesia. The fundamentals of the metals and mining sector are compelling, given the strength of demand from China and India, and we are ideally located to capitalise on that growing demand. Indonesia itself also offers us many exciting growth opportunities as power consumption continues to grow in this politically stable and economically strong country."

This summary should be ready in conjunction with the full announcement attached including the Appendix which includes certain defined terms used throughout this announcement.

A presentation to investors and analysts will be made at 11:30am GMT today. This presentation will be broadcast live at www.vallar.com. 

For further information, please contact:  

Vallar:	01534 728 235
Nathaniel Rothschild Sir Julian Horn-Smith
J.P. Morgan Cazenove:	020 7588 2828
Ian Hannam Ben Davies Neil Passmore
Finsbury:	020 7251 3801
Ed Simpkins
Clare Hunt

This announcement has been issued by and is the sole responsibility of the Company. No representation or warranty express or implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by J.P. Morgan plc (which conducts its UK investment banking activities as J.P. Morgan Cazenove) ("J.P. Morgan Cazenove") or by any of its affiliates or agents as to or in relation to, the accuracy or completeness of this announcement or any other written or oral information made available to or publicly available to any interested party or its advisers, and any liability therefore is expressly disclaimed.

J.P. Morgan Cazenove, which is authorised and regulated by the Financial Services Authority, is acting for the Company in connection with the Acquisition and no one else and will not be responsible to anyone other than the Company for providing the protections afforded to clients of J.P. Morgan Cazenove.

Credit Suisse, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting for Bumi, Berau and the Bakrie Group and no one else in connection with the transaction and will not be responsible to anyone other than the aforementioned for providing the protections afforded to clients of Credit Suisse nor for providing advice in connection with the transaction or this announcement or any matter referred to herein.

This announcement does not constitute or form part of any offer or invitation to purchase, otherwise acquire, issue, subscribe for, sell or otherwise dispose of any securities, nor any solicitation of any offer to purchase, otherwise acquire, issue, subscribe for, sell or, otherwise dispose of, any securities.

This announcement is not an offer of securities for sale or a solicitation of an offer to purchaser securities.  The securities of the Company referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), and may not be offered or sold in the United States unless they are registered with the U.S. Securities and Exchange Commission or an exemption from the registration requirements of the Securities Act is available.

The release, publication or distribution of this announcement in certain jurisdictions may be restricted by law and therefore persons in such jurisdictions into which this announcement is released, published or distributed should inform themselves about and observe such restrictions.

This announcement does not constitute or form part of any offer or invitation to purchase, otherwise acquire, subscribe for, sell, otherwise dispose of or issue, or any solicitation of any offer to sell, otherwise dispose of, issue, purchase, otherwise acquire or subscribe for, any security, therefore this announcement does not constitute a public offering in Indonesia under Law Number 8 of 1995 regarding Capital Market.

Certain statements in this announcement are forward‑looking statements which are based on the Company's, expectations, intentions and projections regarding its future performance, anticipated events or trends and other matters that are not historical facts.  These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such forward‑looking statements.  Given these risks and uncertainties, prospective investors are cautioned not to place undue reliance on forward‑looking statements.  Forward‑looking statements speak only as of the date of such statements and, except as required by applicable law, the Company undertakes no obligation to update or revise publicly any forward‑looking statements, whether as a result of new information, future events or otherwise.

No statement in this announcement is intended as a profit forecast and no statement in this announcement should be interpreted to mean that earnings per Ordinary Share for the current or future financial years would necessarily match or exceed the historical published earnings per Ordinary Share.

VALLAR PLC
16 November 2010

Vallar Plc ("Vallar" or the "Company") announces acquisition of holdings in PT Bumi Resources Tbk ("Bumi") and PT Berau Coal Energy Tbk ("Berau")

Creation of London‑listed Indonesian coal champion

Introduction

Vallar is pleased to announce its intention to create a London-listed Indonesian resources champion through the proposed purchase of 25% of Bumi and 75% of Berau for a combined consideration of approximately US$3.0 billion. The proposed Acquisition will create a diversified international mining company built around a significant coal production base in Indonesia and a project pipeline of coal, base metals and other minerals across Asia and Africa.

Together, Bumi and Berau will have 2010 calendar year expected production of 78Mt⁶ of coal and over 12bn tonnes of resources^6.  The Company intends to be the first major Indonesian focused company to achieve a Premium Listing on the Official List of the Financial Services Authority and trading on the London Stock Exchange's main market for listed securities and also, subject to applicable laws, will explore a potential listing on the Indonesia Stock Exchange. The Company will be renamed Bumi Plc.

Vallar believes that the proposed Acquisition will create a vehicle with exposure to the fast growing Indonesian and pan-Asian region.

Indonesia is the largest economy in Southeast Asia and is the third fastest growing country in the G20, behind China and India. Coal production in Indonesia has increased nearly 40% over the last five years and both domestic and export demand is expected to grow significantly. As the world's largest exporter of thermal coal, Indonesia is ideally positioned to benefit from growing import demand from Asian economies, particularly China and India. Indonesia's proximity to these key end markets facilitates reduced transportation costs for exporters relative to those in other major coal exporting countries such as Australia and Colombia.

Through Bumi's base metals subsidiary, PT Bumi Resources Minerals Tbk ("BRM"), Vallar will also have exposure to interests in copper, gold, iron ore, lead, molybdenum and zinc assets with the most significant of these being an effective 18% stake in the Batu Hijau copper/gold mine on the Indonesian island of Sumbawa.  BRM is currently seeking a listing on the Indonesia Stock Exchange as part of its IPO.

The proposed Acquisition will be treated as a "reverse takeover" for the purposes of the Listing Rules. Accordingly, following the release of this announcement, the Company understands that the Ordinary Shares will be suspended from trading on the Official List and on the London Stock Exchange.  The Company and its advisers intend to work closely with the FSA to provide the required information for trading in the Ordinary Shares to re-commence at the earliest possible date. The Company will provide updates to the market as appropriate.

6 Aggregate of 100% of Berau and Bumi

1.   The Acquisition

The proposed Acquisition will consist of:

·      Consideration of US$1,584 million paid by Vallar to Mutiara, a subsidiary of Recapital for 75% of Berau (at Rp.540 per Berau Share), comprising:

-       US$739 million cash consideration for 35% of Berau (US$639 million will be paid to Mutiara shortly after the signing of the Berau Transaction with the balance being subject to the escrow arrangement described below); and

-       52.3 million new Vallar Shares, issued at a value of £10.00 per Vallar Share, in consideration for 40% of Berau

·      Consideration of 90.1 million new Vallar Shares, issued at a value of £10.00 per Vallar Share, for 25% of Bumi from the Bakrie Group (comprised of approximately 62.7 million new Ordinary Shares and 27.4 million new Suspended‑voting Ordinary Shares).

The proposed Acquisition is expected to complete on or around 8 April 2011.

Purchase of 75% holding in Berau

Vallar's proposed purchase of 75% of Berau will trigger a Mandatory Cash Offer ("MCO") for the remaining issued share capital of Berau. The MCO will be made on the same terms as Vallar's acquisition at Rp.540 per Berau Share. Mutiara has undertaken not to accept the MCO in respect of those Berau Shares that it will continue to own following the closing of the Berau Transaction. The MCO will be triggered upon transfer of the registered title to the Berau Shares to Vallar by Mutiara, which is expected to take place on or around 8 April 2011 after the expiry of BCE Lock-up pursuant to which Mutiara is restricted from transferring its holding of Berau Shares until 7 April 2011. Prior to the release of the BCE Lock‑up, with effect from the Initial Berau Closing (which is expected to occur on or around 18 November 2010) Vallar will hold an indirect economic and voting interest in Berau through arrangements entered into with Mutiara. Completion of the Berau Transaction will take place on, or shortly after, the expiry of the BCE Lock-up

A portion of the Berau Shares proposed to be purchased will be acquired by the Vallar Subsidiary rather than Vallar itself and the Berau Shares proposed to be purchased by Vallar are expected to be transferred to the Vallar Subsidiary in due course.

J.P. Morgan Cazenove acted as financial adviser to Vallar in relation to the Berau Transaction and provided a fairness opinion. Credit Suisse acted as financial adviser to Berau in relation to the transaction.

Purchase of 25% holding in Bumi

Due to the size of its current shareholding in Bumi and the size of the interest it will acquire in Vallar following the closing of the Bumi Transaction, the Bakrie Group has agreed that part of the consideration it receives will be in the form of Suspended-voting Ordinary Shares in order to ensure that the Bakrie's Group's aggregate holding in Vallar will not exceed 29.9%. The Suspended-voting Ordinary Shares will automatically convert into Ordinary Shares in the event of further equity issues by Vallar provided that following conversion the Bakrie Group's holding of Ordinary Shares does not exceed 29.9% of the total number of issued Ordinary Shares. Bakrie Group will be the largest combined shareholder in Vallar with 43.0%⁷ of Vallar Shares and will have the right to nominate three directors including the position of Chairman, Chief Executive Officer and the Chief Financial Officer and will continue to control the management, operations and policy of Bumi

7 Voting interest limited at 29.99% with balance held in Suspended-voting Ordinary Shares

The transfer by B&BR (one of the members of the Bakrie Group) of Bumi Shares to Vallar is required to be approved by shareholders of B&BR at a shareholders' meeting which is expected to convene on or around 14 January 2011. The Bakrie family have irrevocably committed to exercise or direct the exercise of a sufficient number of the voting rights attaching to B&BR shares to ensure that the required shareholders' resolution to be put to B&BR's shareholders is passed at that shareholders' meeting. Completion of the Bumi Transaction will take place on, or shortly after, the passing of the aforementioned shareholders' resolution.

Under the terms of the Bumi Transaction, the Bakrie Group has agreed to pay US$150 million if the Bumi Transaction fails to complete in accordance with its terms as a result of their default. Of this US$150 million, US$100 million will be paid into an escrow account with J.P.Morgan Chase.

Subject to market conditions, applicable laws and regulations, a potential exchange offer on terms to be confirmed, issuing new Ordinary Shares in return for Bumi Shares, is being considered for the outstanding Bumi Shares not acquired by Vallar pursuant to the Acquisition.

J.P. Morgan Cazenove acted as financial adviser to Vallar in relation to the Bumi Transaction and provided a fairness opinion. Credit Suisse acted as financial adviser to Bumi and the Bakrie Group in relation to the transaction.

The shareholding structure of the Company following the completion of the both the Transactions is expected to consist of:

Bakrie Group	43.0%
Recapital (via Mutiara)	24.9%
Existing Vallar ordinary shareholders	28.3%
Vallar management and Founders	3.8% (pre-conversion of Founder Shares into Ordinary Shares)