PT Harum Energy (HRUM) is about to release a maximum of 49 percent of its shares in subsidiaries in the nickel business, PT Harum Nickel Perkasa (HNP) and PT Tanito Harum Nickel (THN), to Chinese stainless steel smelting giant Eternal Tsingshan Group.
“In order to develop the company’s nickel portfolio, the company has signed a Memorandum of Understanding with Eternal Tsingshan Group Limited (ET) on April 5, 2024,” Ray A. Gunara, CEO of PT Harum Energy, said on Thursday, April 18, 2024.
Eternal Tshingshan Ltd is a company incorporated in Hong Kong SAR, which, through its affiliates, has invested in Indonesia mainly in the nickel processing and refining. Eternal Thingsan is also the operator partner of the smelter project of the company, and the operator of Indonesia Weda Bay Industrial Park, in North Maluku Province, where such projects are located.
Based on the MoU, the company and Eternal Tshingsan Group Ltd intend to establish a strategic cooperation whereby Eternal Tshingsan, which has experience in the nickel processing and refining sector, will become a strategic partner of the company in managing and developing the projects under Harum Energy’s nickel portfolio.
To realize such strategic cooperation, the company’s subsidiaries, namely Harum Nickel Perkasa and Tanito Harum Nickel, intend to first issue mandatory convertible notes, which will be subscribed by the Eternal Thingsan whether directly or through one or more entities which will be nominated later. Such notes will be converted into a number of new shares in Harum Nickel Perkasa and/or Tanito Harum Nickel, representing effective ownership of up to 49 percent in the company’s nickel portfolio.
The terms including in relation to principal amount, maturity date and conversion period of the notes will be agreed later by the parties, while always taking into account the prevailing laws.
After the conversion of the notes, Ray said, the company shall effectively remain a majority shareholder in the company’s nickel portfolio. The consideration from the subscription of the notes shall be used by the company and its subsidiaries to settle the amount owed by them in relation to the acquisition of certain interests in the company’s nickel portfolio.
Such strategic coopration as proposed in the Memorandum of Understanding is expected to bring benefits and create various business opportunities for the Company, among others:
– Obtaining synergy by combining the experience and capabilities of the company and Eternal Thingsan in the nickel mining and processing sector in order to maximize efficiency and operational performance of the company’s nickel portfolio in the future;
– Ensuring the continuity of the management and operation of the projects under the company’s nickel portfolio through strategic cooperation by the company and Partner Group;
– Improving the capital structure of the company’s nickel portfolio by lowering the liabilities to equity ratio upon conversion of the notes;
– Forming an integrated nickel industry portfolio from upstream to downstream with diverse nickel product, so it can improve the company’s capability in raising funds to finance future business development;
– Supporting the effort for transfer of technology in the nickel processing and refining industry; and
– Supporting the effort for transfer of knowledge in marketing activities and access to the stainless steel and battery supply chain in the global market.
The company views that the execution of the Memorandum of Understanding does not cause material adverse effect towards operational, legal, finance and business continuity of the company.
Upon the signing of the Memorandum of Understanding, the company and strategic partner will further prepare all necessary documentations and requirements to realize the strategic cooperation and issuance of the notes pursuant to the prevailing regulations. The company and Eternal Tsingshan as strategic partner are targeting the notes to be issued in the third quarter of 2024.
