LONDON--Indonesian coal miner Bumi PLC (BUMI.LN) said Wednesday
it's finalizing the details of a separation deal with its major
shareholder and co-founder, the Bakrie Group, that would result in
Bumi selling its stake in Indonesia's largest coal miner, PT Bumi
Resources TBk (BUMI.JK), for more than $500 million in cash to the
Bakrie Group.
This marks a departure from a preliminary agreement between the
two parties in which Bumi had agreed to sell a 29.2% stake in Bumi
Resources for $278 million in cash to the Bakrie Group and the
cancellation of the Bakrie Group's 23.8% stake in Bumi PLC.
Bumi said that it "has been made aware" that PT Borneo Lumbung
Energi & Metal, Tbk (BORN.JK), which is controlled by Bumi's
chairman Samin Tan and owns a 23.8% stake in Bumi, is holding
ongoing discussions with the Bakrie Group to purchase the Bakrie
Group's stake in Bumi. Bumi said it isn't party to those
discussions but has been informed that the Bakrie Group will only
sell its Bumi shares to Borneo if Bumi agrees to sell its Bumi
Resources stake to the Bakrie Group.
"The separation transaction is subject to ongoing negotiations
but the economic terms remain consistent with the original proposal
received by the company from the Bakrie Group in October 2012,"
Bumi said in a statement.
The Bakrie Group has been seeking to separate itself from the
troubled miner since October after repeated boardroom rifts over
corporate governance issues and the launch of an independent probe
into financial irregularities at Bumi's Indonesian assets. This,
alongside falling coal prices, has caused Bumi's share price to
plummet 82% since its initial listing as Vallar in 2010.
Bumi and the Bakrie Group signed a preliminary separation
agreement in February. As part of that deal, the Indonesian
conglomerate controlled by the influential Bakrie family agreed to
buy an 18.9% stake in Bumi Resources from Bumi for $278 million in
cash. In a second transaction, the Bakrie Group would buy Bumi's
10.3% stake in Bumi Resources in exchange for cancellation of the
Bakrie Group's Bumi shares.
For the new deal to go ahead, Bumi has been informed that its
shareholders would have to vote in favor of a waiver that would
allow Borneo to double its holding in Bumi PLC without triggering a
U.K. takeover requirement to make a full takeover offer for the
London-listed miner.
The new deal would satisfy the goal of severing ties between the
Bakrie Group and Bumi, while giving Bumi shareholders cash in hand
rather than a mix of cash and Bumi shares as previously outlined in
a preliminary proposal last year. It will also make Borneo the
largest shareholder in Bumi.
Bumi said given the potential for a conflict of interest, Bumi's
board directors who are affiliated with Borneo--namely Mr. Tan and
Borneo CEO Alex Ramlie--"have voluntarily recused themselves from
the [board approval] process."
Nathaniel Rothschild, a major shareholder and co-founder of
Bumi, said Tuesday that the alternative proposal "is Samin Tan's
side deal: taking control without paying a premium, and denying
minority shareholders the potential upside that ALL would have
enjoyed equally from buying back the stake."
Mr. Rothschild called on U.K. regulators and Bumi's board to
shun such behavior and once again called for Mr. Tan to step down
immediately as chairman, given his conflict of interest.
Mr. Tan has previously said that he would step down as chairman
once the deal with Bakrie Group is done and a new independent
chairman has been selected. He also told reporters at Bumi's annual
general meeting last month that there was no side deal between him
and the Bakrie Group.
Write to Alex MacDonald at alex.macdonald@wsj.com
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