The energy & resources sector in Indonesia continues to attract international interest and coal is proving to be consistently popular amongst investors. PT Indika Energy, a company with strategic investments in the area of coal production, is the latest Indonesian company to complete a successful notes offering.

“The natural resources industry, especially coal, has been hot for the last couple of years and it will keep on going like this,” said Elizabeth Silalahi, partner at Melli Darsa. “The coal industry is consistently being sought by investors. It’s more sustainable and it’s already there – it just needs to be exported.”

Silalahi compares the coal industry to another natural resource – palm oil. “Four or five years ago, it was hot, but prices have dropped with the drop in oil prices. With palm oil, there are land issues, you need to cultivate it and wait for around five years before harvesting,” said Silalahi.

Melli Darsa is not new to coal. It has worked consistently with PT Indika Energy for the past few years and acted as counsel on its IPO last year. As with other recent deals in Indonesia, this particular transaction required the lawyers to consider the application of Law 24/2009 and whether or not to translate the transaction documents into Indonesian.

“Even among Indonesian law firms, this is only the third or fourth deal done after the law has been issued,” said Silalahi. “Different law firms have different views.” In the end, all the parties were comfortable with the decision to translate all the transaction documents into both Indonesian and English. However, the issue of legal opinions with regards to the enforcement of such documents posed a challenge. “It was quite a negotiation even for the opinion on that law. There was quite a long discussion on [the opinion] and around its qualifications,” she said.

The funds raised by PT Indika Energy will be used to expand the business of the group, fund future acquisitions and investment and for other general corporate purposes.

Melli Darsa was responsible for all matters relating to Indonesian laws including due diligence, drafting the security documents and corporate approvals, and reviewing various transaction documents.

Related Stories:

• Indonesia: Susanto, ABNR and Melli Darsa work with international firms on complex mining transaction
• PT Adaro financing confirms interest in Indonesian natural resources
• Firms reap benefits of first Indonesian high-yield debt deal since beginning of GFC