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Nathaniel Rothschild’s Asia Resource Minerals $501 Million Separation Deal Closes With Sighs Of Relief All Round

Nathaniel (Nat) Rothschild


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At the end of last week Asia Resource Minerals announced that the US$501 million in moneys needed to initiate a major, and complicated, shareholder restructuring transaction had finally all been placed in escrow in a Singapore bank, and that they expected the deal to close by today. Jewish Business News reported this here .

Well, Asia Resource Minerals has just announced that indeed all the moneys have flowed to where they should be, and the deal is now done.

Just to recap, in a culmination of am eighteen month saga of struggle for coherence in the shareholdings of the company, today Asia Resource Minerals completed the disposal of its 29.2% interest in its coal mining affiliate Bumi Resources to the Bakrie Group for US$501 million in cash. This leaves it with its 84.7% position in Berau Coal as its single, though very important, operating entity.

Simultaneously RACL, a company owned by the Company’s current Chairman, Samin Tan, today has purchased the entire Bakrie 23.8% shareholding in Asia Resource Minerals for US$223 million. As a result, companies controlled by Samin Tan now own 47.6% of the total shares of the Company.

The net result is a “Separation” of the Bakries from the company. This has been a goal since the three original partners who founded Asia Resource Minerals the Bakries and Samin Tan, each with 23.8%, and Nathaniel Rothschild with 21% fell out not long after it was all put together four years ago, over some significant governance issues that later emerged.

The obviously very much relieved CEO of Asia Resource Minerals, Nick von Schirnding, said of today’s closing, “I am delighted to be able to announce that we have successfully completed the Separation. It has been a long and difficult process and we have overcome numerous challenges along the way to achieve a highly attractive outcome for our shareholders in the circumstances. I am grateful for the continued support of shareholders as we continue to deliver our key objectives in turning the business around.”

Given so many interested parties, both on and off the board, it fell to the Senior Independent Director Nick Salmon, who chaired the Committee of Independent Directors that oversaw this reconstruction of shareholdings to comment as well on today’s transaction. He said, “We believe that delivering separation from the Bakries and now being in a position to return at least $400m to shareholders is a significant achievement given the very difficult situation given rise by the way the company was initially created, structured and operated.” The reference he makes to the US$400 million is to a special dividend that may now be paid out to all shareholders after the sale of Bumi Resources. Not uncoincidentally, Samin Tan’s share of this dividend will obviously help him finance the purchase of the Bakries shares, so when is all said and done some of these moneys have been flying around in something of a cicrle.

Importantly, however, Nick Salmon then also referred to the still outstanding serious governance question relating to a US$176 million deficiency in the accounts of Berau Coal, over which redress is being sought via arbitration – as he put it, “We will continue our efforts to recover value for shareholders in particular taking all appropriate actions in respect to Rosan Roeslani with the appropriate authorities in the UK, Indonesia and other relevant jurisdictions.”

The UK regulatory authorities have been looking at some of the company’s governance questions as well, after an earlier request by Nathaniel Rothschild who had been aggressively attacking governance weaknesses that he found after he made independent investigations in Indonesia himself. Salmon accordingly referenced this issue as well, saying “At the same time we are fully cooperating with the previously disclosed regulatory investigations regarding the Company’s formation in 2010 and subsequent events, all of which have created a major additional workload for the management.”

Finally Nick Salmon thanked the team that brought this all to pass, saying “We would like to thank Nick von Schirnding and his team for their extraordinary efforts over the past year and a half and Samin Tan for his key role in unlocking the previous stalemate and helping deliver the separation.”

Now at least the company can get back to the mining business, with at least some of these issues resolved. Nathaniel Rothschild, who deep down may well even regret having put the company together, now has the right to nominate a director to the board as long as he remains a 15% shareholder. And now that Samin Tan’s companies hold a near majority control position in Asia Resource Minerals he has stated he will stand down as Chairman in favour of an independent Chairman, and one acceptable to the City.

While the shares still remain depressed at a quarter of their original flotation level, the recent fall in coal prices has also had something to do with that. Given time therefore, there is now perhaps prospect for improvement. So far today’s announcement has brought only a modest uptick in the share price as it was widely expected.



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