Harum Energy

DISCLOSURE OF INFORMATION IN RELATION TO A MATERIAL TRANSACTION OF PT HARUM ENERGY TBK.

Oct 02, 2023

This Disclosure of Information is prepared and addressed to the shareholders of PT Harum Energy Tbk. (the “Company”) and the public in compliance with the Financial Services Authority (Otoritas Jasa Keuangan (“OJK”) Regulation No. 17/POJK.04/2020 regarding Material Transactions and Change of Business Activities (“POJK 17”).

PT Harum Energy Tbk.

Main Business Activities:

holding company activities, mining, trading, and industrial

Main Office:

Deutsche Bank Building, 9^th Floor
Jl. Imam Bonjol No.80, Jakarta Pusat – 10310 – Indonesia
Telepon / Telephone: (+6221) 3983 1288
Faksimili / Facsimile:(+6221) 3983 1289
Surel / Email: corsec@harumenergy.com
Situs Web / Website: www.harumenergy.com

This Disclosure of Information is important to be read and considered by the Company’s shareholders.

If you are having difficulty in understanding the information contained in this Disclosure of Information, you should consult with your broker, investment manager, legal counsel, public accountant, or other professional advisor.

The Board of Directors and Board of Commissioners of the Company, both individually and jointly, are fully responsible for the accuracy of the information or material facts contained herein and emphasize that the information stated herein is accurate and there is no misstatement of a material fact or no omission of material facts which may cause the material information in this Disclosure of Information to be inaccurate and/or misleading

This Disclosure of Information is published on 02 October 2023.

DEFINITIONS

BSE means PT Blue Sparking Energy, a limited liability company, domiciled in South Jakarta, which is established and operated under the laws of the Republic of Indonesia.

Disclosure of Information means this disclosure of information by the Company to its shareholders and public in compliance with the provisions of POJK 17.

First Quarter Interim Financial Statement 2023 Limited Review means the Company’s Consolidated Financial Statement as of 31 March 2023 and for the three-month period then ended, which has been reviewed on a limited basis by Public Accountant Purwanto, Sungkoro & Surja.

OJK shall have the meaning given to it in the beginning of this Disclosure of Information

Loan Agreement shall have the meaning given to it in Section A.I. of this Disclosure of Information.

Company means PT Harum Energy Tbk., a publicly listed company whose shares are listed at the Indonesia Stock Exchange, established and operated under the laws of the Republic of Indonesia, having its domicile in Central Jakarta.

POJK 17 shall have the meaning given to it in the beginning of this Disclosure of Information.

THN means PT Tanito Harum Nickel, a subsidiary of the Company, domiciled in Central Jakarta, which is established and operated under the laws of the Republic of Indonesia.

Rupiah means the lawful currency of the Republic of Indonesia.

USD means United States Dollar, the lawful currency of the United States of America.

INTRODUCTION

In compliance with the provisions of POJK 17, the Board of Directors of the Company hereby announce this Disclosure of Information with the intention to inform the shareholders of the Company in relation to a loan facility to be provided by THN (the Company’s Controlled Entity) to BSE (the “Transaction”), as further set out in this Disclosure of Information.

The Transaction constitutes a material transaction for the purposes of POJK 17, with a transaction value of more than 20% of the equity of the Company. Therefore, pursuant to the provisions of POJK 17, the Transaction must use an independent appraiser in determining the fairness of the material transaction. For such purpose, THN has engaged an independent appraiser and has received the fair value for the Transaction based on the Appraisal Report from the Office of Public Appraisal Services (“KJPP”) Iskandar dan Rekan No. 00339/2.0118-00/BS/02/0596/1/IX/2023 dated 12 September 2023 (“Appraisal Report”).

In relation to the above matter, this Disclosure of Information is prepared and announced in order to comply with the provisions of POJK 17 which requires the Company to disclose the Transaction to public and, to disclose and provide the supporting documents on the Transaction to OJK, no later than 2 (two) business days from the date of the Transaction.

A.DESCRIPTION OF THE TRANSACTION

OBJECT AND VALUE OF THE TRANSACTION
In relation to the Transaction, THN and BSE have entered into a Loan Facility Agreement on 29 September 2023 in relation to the provisions of a loan facility from THN to BSE in the amount of up to USD500,000,000 or its equivalent amount in Rupiah for the purposes of financing the development/construction of a high-pressure acid leaching project at BSE (defined herein Project), including the refinancing of existing indebtedness and for general corporate purposes (“Loan Agreement”).

The disbursement under the loan can be made more than once and shall accrue interest on the outstanding principal balance at SOFR + 2.60% per annum calculated from the date of the disbursement of any Loan until the respective principal amount is fully repaid.

Such loan can be repaid by BSE at any time prior to the maturity date or, in full at the maturity date, which falls on the date 60 months after the signing date of the Loan Agreement. The loan can be repaid by way of cash settlement or, at THN’s discretion, by conversion into shares in BSE on terms to be mutually agreed between THN and BSE.
PARTIES IN THE TRANSACTION AND NATURE OF AFFILIATED RELATIONSHIP WITH THE COMPANY
THN being the lender and BSE being the borrower under the Loan Agreement.

THN is an Indonesian limited liability company, which is engaged in the business of holding company activities, focusing on investments in the nickel business.

BSE is an Indonesian limited liability company which is engaged in the nickel processing and refining business. BSE is developing a high-pressure acid leaching project located in the Indonesia Weda Bay Industrial Park in Central Halmahera Regency. The project is designed to produce nickel-cobalt hydroxide intermediate product (MHP – Mixed Hydroxide Precipitate) with an annual nameplate production capacity of approximately 67,000 tonnes (±10%) of nickel equivalent and approximately 7,500 tonnes (±10%) of cobalt, together with its supporting facilities and infrastructure (the “Project”).
EXPLANATION, CONSIDERATION, AND REASONING FOR THE TRANSACTION&nbsp;
The Company is a publicly listed company engaging in the business of, among others, holding company activities, mining, trading, and industrial activities.

In order to achieve sustainable business growth, one of the Company’s main efforts is to diversify its business through expansion into the nickel mining and processing business.

The Transaction is an implementation of the Company’s business expansion into the nickel mining and processing business in an effort to create sustainable business growth. BSE is currently in a construction phase of a high-pressure acid leaching project which requires funding for the development and construction of such project. The Transaction is expected not only to broaden the Company’s nickel product diversity, but also to provide the Company with an opportunity to participate in the battery materials market.

In relation to the above, the provision of the loan facility under the Loan Agreement is to fund the development and construction of BSE’s high-pressure acid leaching project, including the refinancing of existing indebtedness and for general corporate purposes.

B.THE IMPACT OF THE TRANSACTION ON THE COMPANY'S FINANCIAL CONDITION

The table below shows a summary of the financial condition of the Company and its subsidiaries as of 31 March 2023 before and after carrying out the Transaction:

(dalam USD '000)

C.SUMMARY OF APPRAISAL REPORT

THN has engaged KJPP Iskandar dan Rekan (“KJPP IDR”) pursuant to Appointment Letter No. 136.2/IDR/DO.2/Pr-FO/VIII/2023 dated 8 August 2023 as the independent appraiser to assess the Transaction and to provide a fairness opinion on the Transaction.

Subsequently, THN has received a fair value for the Transaction as set out in the Appraisal Report, as summarized below:

Parties’ Identity
The Parties in the Transaction are THN as the lender, and BSE as the borrower.
Appraisal’s Object
The appraisal’s object is the proposed loan facility transaction (defined herein as the Transaction) to BSE provided by THN (the Company’s Controlled Entity).
Purpose and Objective of the Appraisal
The purpose and objective of the appraisal is to provide a fairness opinion on the proposed Transaction for the purposes of implementing the Transaction.
Main Assumptions and Limitations
1. The Appraisal report is a non-disclaimer opinion.
2. The appraiser has reviewed the legal status of documents used in the appraisal process.
3. The data and information come from trustworthy sources.
4. The financial projection used is the adjusted financial projection that reflects the fairness of the financial projection made by management with the ability of being achieved (fiduciary duty), if the appraisal uses the financial projections.
5. The appraiser is responsible for the implementation of appraisal and fairness of the financial projections.
6. This Appraisal Report is open to public, except for information which is confidential in nature, which may affect the company’s operations.
7. The appraiser is responsible for the Appraisal Report and the final conclusion.
8. The appraiser obtained information on the legal status of the appraisal object from the assignor.
9. Other assumptions and limitations are set out in the Appraisal Report.
Appraisal Approach and Methods
Based on the scope of appraisal, the approach and methods that have been used are as follows:
1. Conducting Transaction analysis;
2. Conducting a qualitative analysis of the proposed Transaction;
3. Conducting a quantitative analysis of the proposed Transaction;
4. Conducting an analysis on the guarantee related to the Transaction;
5. Conducting an analysis on the fairness of the Transaction’s value;
6. Conducting an analysis of other relevant factors.
Fairness Opinion on the Transaction
The amount of fund as the Transaction’s object in the form of provision of a loan facility to BSE by THN can be repaid on the maturity date, therefore it is concluded that the fund amount of the Transaction’s object is fair.

The result of the analysis on the interest rate of the loan from THN that is charged to BSE is within the range of similar interest rate of certain previous transactions, therefore it can be concluded that the interest rate of the loan charged by THN to BSE is fair.

The results of the analysis of the financial impact of the Transaction that will be carried out towards the interests of shareholders are that it can support BSE investment activities and can increase the Company's profits and profitability from interest income, thereby being in line with the interests of shareholders.

The results of the analysis of business considerations used by the Company’s management in relation to the proposed Transaction which will be carried out towards the interests of shareholders are that THN can support BSE to operate commercially and has the potential to become a majority shareholder in BSE if the relevant loan is settled through share conversion.

Based on the conclusions from the results of the analysis above, KJPP IDR is of the opinion that the transaction is fair.

D.STATEMENTS OF THE BOARD OF DIRECTORS AND THE BOARD OF COMMISIONERS

This Disclosure of Information is made pursuant to, and announced to comply with, the provisions of POJK 17 in relation to the Transaction.
The Transaction is a material transaction and does not constitute an affiliated transaction as set out under POJK 17.
The Transaction does not contain any conflict of interest as set out under OJK Regulation No. 42/POJK.04/2020 regarding Affiliated Material Transactions and Conflict of Interest Transactions.

E.ADDITIONAL INFORMATION

To obtain further information in relation to the above matters, the shareholders of the Company may contact the Company during office hours at the following address: