UPDATE 1-Banpu Indonesian arm sets IPO price at 14,000 rph/shr

(Adds details)

JAKARTA, Dec 3 (Reuters) - The Indonesian unit of Thai coal miner Banpu PCL BANP.BK, PT Indo Tambangraya Megah, has set the price for its initial public offering at 14,000 rupiah ($1.50) each, a source from a local brokerage house said on Monday.

The price is near the top of the 11,000-15,000 rupiah range set by the company, and could generate around 3.16 trillion rupiah from the sale of 20 percent of its share capital.

The shares will be offered between Dec. 10-12 and the company will list on the newly merged Indonesia Stock Exchange on Dec. 17.

At that price, Indo Tambangraya Megah will be valued at nearly $1.7 billion, making it Indonesia's third largest listed coal miner, in terms of market value, after Bumi Resources BUMI.JK and Bukit Asam PTBA.JK.

Somyot Ruchirawat, Indo Tambangraya Megah's president director, has said the company plans to use 70 percent of the proceeds from the sale to develop its coal business and power plants, and the rest for other needs, including repaying debt.

Indo Tambangraya Megah is the third-biggest coal producer in Indonesia with total production of 19.6 million tonnes in 2006.

PT UBS Securities Indonesia has been appointed as the lead underwriter for the offer with other brokerage houses -- PT Mandiri Sekuritas, PT Bahana Securities, PT Danareksa Sekuritas, BNI Securities and Ciptadana Securities -- helping underwrite the issue.

The company's net profit plunged to $24.9 million last year from $74.6 million in 2005 due to rising costs. But Ruchirawat expects net profit to rise to $40 million this year.