/ By Clive Minchom /
If you have been following the story of Bumi Plc recently, the Indonesian coal mining group listed on the London stock exchange, and which this newspaper has been faithfully reporting on in recent months, you will be aware that it has taken a number of convoluted changes of direction of late and, it seems, may be set for a few more before we are done.
Bumi announced today that the payment terms for a sale of one its two coal mining subsidiaries, 29.2% held Bumi Resources, to the Indonesian Bakrie family, one of the original founding members of the whole group, had now been settled at US$501 million, to be paid in cash. In an additional part of the announcement, though, they also stated there was still much work to be done by its independent committee of the board conducting the sale before it could be finalized.
The terms of the sale “are highly attractive to Bumi shareholders, ” Julian Horn-Smith, Bumi’s senior independent director, said in the statement. “However, more needs to be done before we are able to present a comprehensive package for shareholders to consider.”
A second parallel Bumi transaction is also going through the system, a “Separation Transaction” with the sale of the Bakrie’s 23.8% interest in Bumi itself terms for which were previously announced at the Company’s annual General meeting on June 26th after a general announcment of it had been made back in February. Then another different deal was announced on July 11th, whereby the Bakrie interests were to be sold to a company controlled by the current Bumi Chairman, Samin Tan. The two transactions are inter-conditional and both will be put to a vote of the independent shareholders of the company at a special meeting to be set up for later this year.
To help sweeten the way Bumi also announced today that after the sale of its subsidiary to the Bakries for US$501 million, a big portion of this amount will be dividended out to shareholders. If one were cynical one could say this is a significant incentive for them to approve the deal.
In the mean time the company’s shares remain suspended, which occurred several months ago when financial irregularities in the accounts had been uncovered. At the company’s annal general meeting on June 26th Bumi also announced that a party deemed responsible for much of the financial loss through possible misappropriation of funds, responsible for the suspension of stock trading, Rosan Roeslani, and himself a former CEO of Bumi subsidiary 85% held Berau – the coal mining subsidiary which will be retained by Bumi – had agreed to put back US$178 million of the possibly misappropriated funds, “without admitting wrongdoing.”
Finally current Bumi Chairman Samin Tan will end up with about 47.6% of the company if his bid for the Bakrie shares goes through. Bumi’s announcement today also stated that an independent Chairman would be now sought for the company.
The sale to Tan continues to infuriate Nathaniel Rothschild, who had founded the group with the Tan’s and the Bakries originally until he soured on them once he saw some of the standards of governance in practice out in the field. It was a London Take Over Panel ruling last December indicating the Bakrie’s were acting in concert with the other significant Indonesian holders which had led to the demand for their separation from the company, and also to the sale by, surprise surprise, Rosan Roeslani of his own 10% stake.
However Nathaniel Rothschild who still owns a 14.8 percent stake in Bumi, and who was a Director of the company until he left the board during the extreme shareholder battles of recent months, fumed today in relation to the Bakrie Separation Transaction as it is now proposed:
“The proposed transaction is unrecognizable from the one that was described (originally) on Feb. 12 as being ‘fixed, ’” he said in e-mailed comments. “No independent chairman in their right mind will want to be involved with a company which, if this deal is allowed to stand, will be continue to be controlled by the Bakrie Concert Party via Samin Tan.” U.K. regulators should step in to “ensure the interests of independent shareholders are protected, ” he said.
This is a ruthless battle for control of a company rich in resources by local Indonesian interests, on the one hand, playing by local rules, and by Nathaniel Rothschild who engineered the formation of the company and its listing on the London exchange, on the other. The Indonesian interests have the advantage of being on the ground, Nathaniel Rothschild has the advantage of representing principles of sound governance and who, in effect, holds restored trading of the shares hostage until all such governance matters are properly sorted out. Trouble is possession is nine-tenths of the law, as they say, and those on the ground may hold an ultimately possibly decisive advantage.
I hate to say it but do follow the story here in these pages, from time to time, as it is probably more likely than not there will be even more twists and turns before it is all concluded. They say truth is stranger than fiction and I imagine it would certainly be hard to invent some of the complications we see here…
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