Indonesia's Adaro Shares Suspended on Buyback Plan

Indonesian coal miner, PT Adaro Energy Tbk, has had its shares suspended following a request by the firm because of pending negotiations on a potential share buyback, the company and an exchange official said on Tuesday.

The firm, which control Indonesia's second-biggest coal miner PT Adaro Indonesia, was in negotiations with international institutional investors on the planned buy back, it said in a statement.

"We fear that a disorderly market can be created by a leak of information related to that transaction," it said, adding the suspension should only last until after the share buyback announcement.

The company did not details how many shares it planned for the buyback.

"We wish to signal that the stock is undervalued, where the share price is lower than its fair value," Garibaldi Thohir, Adaro Energy's chief executive officer, said.

"We were approached by (a) few international financial institutions who hold a significant block of our shares and wish to sell their shares," Thohir said.

Adaro's shares have fallen 33.6% to 730 rupiah a share from its IPO price of 1,100 rupiah each in July on a combination of falling crude oil prices and as markets across Asia tumbled after financial turmoil in the US market.

The Indonesian Stock Exchange had suspended trading in Adaro's shares, said Eddy Sugito, listing director at the bourse.

"We suspended Adaro's shares today. We are asking the company to give details on the (buyback) plan," Sugito said.

It was not clear how long the suspension would last.

Coal prices for power generators in Australia, a benchmark for Asia, have fallen below $130 a ton in recent weeks amid worries of slowing demand in Europe and China, against an early July peak of more than $200.

Adaro aims to produce 38 million tons of coal in 2008.

by Fitri Wulandari; editing by Ed Davies