BUMI PLC: Update Announcement
10 December 2012
For Immediate Release
Bumi plc ("Bumi" or the "Company")
Update announcement Highlights: * Near final version of investigation report received * Board evaluating all legal and commercial options available to it in light of report * No material asset write-downs as a result of the investigation * Company working towards a transaction which separates the Bakrie Group from the Company and divests the minority interest in Bumi Resources1 * Relevant shareholders (PT Borneo Lumbung Tbk and Bukit Mutiara) have informed the Board that they have no intention of selling their shareholdings on the terms of the NR Investments Proposal2 * CEO Nalin Rathod to be succeeded by Nick von Schirnding
Bumi announced on 24 September 2012 an independent investigation into allegations concerning, among other matters, potential financial and other irregularities in the Company's Indonesian operations, especially in relation to PT Bumi Resources Tbk ("Bumi Resources"), in which the Company has a 29% interest. The Company has now received a near final version of a report (the "Report") by Macfarlanes LLP. In light of the Report, the Board is evaluating all legal and commercial options available to it and has been engaging actively with UK regulators and will continue to do so as appropriate.
In connection with the investigation, the Company has conducted a technical examination which has shown that information has been obtained illegally by email hacking. The Board also notes the statements made on behalf of the Bakrie Group about the use of illegal e-mail hacking to obtain information used in the investigation. The Board is considering with its advisers further issues raised by the provenance of the material passed to it and the bearing these matters may have on the courses of action available to the Company. However, these matters do not affect the seriousness with which the Board is treating the allegations.
The Company's Audit Committee has considered whether, in light of the Report, any further asset write-downs will be required and believes that these are not likely to be material given the extensive write-downs already made in respect of certain development assets, which were a main focus of the Macfarlanes investigation. Separately, and unrelated to the Report, there will be a significant (non-cash) year end accounting adjustment to reflect the impairment of the carrying value of PT Berau Coal Energy Tbk ("Berau") due to lower thermal coal prices and the reclassification of the Company's 29% shareholding in Bumi Resources from an associate to an investment which will be marked to market.
As previously announced, the Company has received a proposal from Long Haul (the "Long Haul Proposal"). An alternative proposal has also been received from NR Investments (the "NR Proposal")2. The Board notes that the NR Proposal requires certain shareholders, PT Borneo Lumbung Tbk ("Borneo") and Bukit Mutiara, to agree to sell their shares. These shareholders have informed the Board that they have no intention of selling on the terms of the NR Proposal.
The Board 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. Both the Long Haul Proposal and the NR Proposal include these two steps.
It is not and never has been the intention of the Board to recommend the disposal of Berau on the terms proposed by the Bakrie Group.
Mr Nalin Rathod has informed the Board today of his intention to step down as Chief Executive Officer of the Company on 31 December 2012 and will serve as a non-independent, non-executive director. He will be succeeded as Chief Executive by Mr Nick von Schirnding who will join the Board on that date.3
Sir Julian Horn-Smith commented: "The Independent Non-Executive Directors are continuing to work through a number of very complex issues as quickly as possible with a clear focus on maximizing shareholder value. I would like to thank Nalin for his contribution during his time as CEO of the Company. We are fortunate to have a candidate of the calibre of Nick von Schirnding to lead the Company through this next phase."
1 Pending the conclusion of an ongoing regulatory investigation the Board will not be in a position to recommend a course of action to shareholders
2 The NR Proposal comprises the following proposed steps:
1. New investors in Bumi would subscribe on a non pre-emptive basis for new
shares in Bumi equal to 25% of the current issued share capital (20% of the enlarged). The subscription price is assumed to be the prevailing Bumi share price and would be equal to the price paid to Borneo and Bukit Mutiara to buy back their Bumi shares (see step 4 below); 2. Bakrie Group to exchange with Bumi its effective 23.8% interest in the issued share capital of the Company for 10.3% of the issued share capital of Bumi Resources. The resultant Bumi treasury shares would be cancelled; 3. Bakrie Group to acquire the balance of Bumi's interest in the issued share capital of Bumi Resources (18.9%) for US$278 million in cash; 4. Borneo and Bukit Mutiara to sell their interests of 23.8% and 9.8% respectively in the issued share capital of Bumi in a targeted buyback for a price per share equal to the subscription price of the new shares issued to the new investors; and 5. Bumi to acquire the 4% of the issued share capital of Berau Coal held by Bukit Mutiara for a cash consideration based on the prevailing Berau share price (and subject to BAPEPAM consent to Bumi continuing to hold greater than 80% of Berau)
Steps 1 to 4 above would be interconditional. Steps 2 and 3 are identical to steps A and B of the Long Haul Proposal.
3 No further information is required to be disclosed pursuant to paragraph 9.6.13 of the Listing Rules of the UK Listing Authority
Note to Editors
Prior to joining Bumi plc in May 2010, Nick von Schirnding was a senior executive at Anglo American plc, where he played a key role in the listing of the group in London and was a close advisor to two successive CEO's. Prior to this Nick worked for De Beers in the Indian diamond industry, spending periods of time in Mumbai and Surat. Nick has worked in IR, Treasury, Accounts as well as a two year stint heading up a venture capital company for Anglo American in South Africa. Nick qualified as a lawyer and also holds an accounting qualification.
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