By Alex MacDonald
LONDON--U.K.-listed Indonesian coal miner Bumi PLC (BUMI.LN)
disclosed Wednesday for the first time the full details of an
alternative proposal that a group of investors led by major Bumi
shareholder and co-founder Nathaniel Rothschild put forward to
break ties with the powerful Indonesian Bakrie family.
Mr. Rothschild proposed to remove not only the Bakrie family but
also buy out two large Indonesian shareholders and board members in
order to ensure the Bakrie family is unable to influence the board
in the future after it leaves the company. Mr. Rothschild's
investor group also wants Bumi to remain a London-listed coal miner
with an 85% stake in Indonesian coal miner PT Berau Coal Energy TBk
(BERAU.JK) rather than sell the stake to the Bakrie family as
envisioned in the Bakrie proposal.
Bumi's shares have tumbled more than 80% from last year's high
due to a boardroom spat about corporate-governance issues and the
launch of an independent probe into financial irregularities at
Bumi's 29% owned Indonesian coal miner PT Bumi Resources TBk
(BUMI.JK). The frayed relations between the family and the company
prompted the Bakrie proposal to offer to buy back all of Bumi's
coal assets for $1.2 billion and the cancellation of its shares in
Bumi PLC.
The Rothschild-backed proposal contains five steps, two of which
are identical to the first two transactions of the Bakrie family
proposal, but which are conditional upon the Bumi chairman Samin
Tan and board member Rosan Roeslani agreeing to sell out of their
respective Bumi stakes. Mr. Rothschild said earlier this week that
he has support from 11 investors, including Bumi's five largest
independent institutional shareholders, for his proposal.
In the Rothschild-backed proposal, investors have agreed to
subscribe to a Bumi rights issue equivalent to 25% of the current
issued share capital. The proceeds would then be used to buy out
Mr. Tan's 23.8% Bumi stake and Mr. Roeslani's 9.8% Bumi stake at
current market prices. With respect to the Bakrie family's exit,
Bumi would also accept the Bakrie family's offer to purchase Bumi's
29% Bumi Resources stake in two separate transactions for $278
million in cash plus the cancellation of the family's 23.8% stake
in Bumi PLC, contingent upon Mr. Tan and Mr. Roeslani agreeing to a
sellout of their stakes.
In a final step, Bumi would also acquire Mr. Roeslani's
remaining 4% stake in Berau Coal at current share prices.
Bumi's board, which is in the process of evaluating its legal
and commercial options after the near conclusion of an independent
probe into alleged financial irregularities at Bumi Resources, said
it "will not be in a position finally to recommend a course of
action until regulatory processes are sufficiently advanced, but is
working towards a transaction which separates the Bakrie Group from
the company and divests the company's minority interest in Bumi
Resources as soon as practical."
The board, however, said that it had no intention to recommend
the sale of the Berau stake on the terms proposed by the Bakrie
Group. The Bakrie group had offered to buy the Berau stake for $950
million sometime next year.
The Bakries said in a statement that Mr. Rothschild's proposal
was "unworkable," given that Mr. Tan's and Mr. Roeslani had
informed Bumi's board that they had no intention of selling their
respective stakes on the terms proposed by Mr. Rothschild's
investment group.
Mr. Rothschild said he was "disappointed" that the board didn't
back his proposal and said it was evidence that the Bakrie Group
and its associates continue to "exert influence over the Board and
Company that is not in the best interests of minority
shareholders."
Nick von Schirnding, the head of Bumi's corporate affairs and
CEO designate, said "We have been in a stalemate too long and our
shareholders deserve better." He added "It is clear to me that all
of our key stakeholders back a separation from Bumi Resources and
the Bakrie Group and we need to find a way to achieve it."
Mr. von Schirnding will take over from CEO Nalin Rathod at the
end of the year. Mr. Rathod is stepping down due to conflict of
interest given his close ties to the Bakrie family.
Bumi's shares closed down 4.9% at 271 pence a share on
Wednesday.
Write to Alex MacDonald at alex.macdonald@dowjones.com
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