Bumi Plc (BUMI)’s two largest shareholders are “absolutely confident” that investors will support a proposal to replace the directors of the coal mining company, including billionaire founder Nathaniel Rothschild.
Bumi, listed in London by Rothschild, said Feb. 3 that shareholder Borneo Bumi Energi & Metal Ltd. called a meeting to seek the removal co-Chairman Rothschild and Chief Executive Officer Ari Hudaya. Rothschild said last month that relations with Chairman Indra Bakrie had improved after he previously criticized Bakrie’s coal company PT Bumi Resources.
“It’s important to have a manageable-sized board that understands the asset and understands the complexity of Indonesia,” Chris Fong, Bakrie Group’s spokesman, said in an interview in London yesterday. “We’re very confident that common sense will prevail and shareholders will see our view that we’re doing the right thing.”
Borneo Bumi Energi is seeking to appoint Bakrie and Samin Tan as chairmen of Bumi. Tan is president director of PT Borneo Lumbung (BORN) Energi & Metal, which bought a stake in Bumi last month. The company also proposed to oust fellow founder James Campbell, a former Anglo American Plc executive, Chief Financial Officer Andrew Beckham and directors Badung Tariono and Amir Sambodo.
Bumi shares slipped 0.5 percent to 746 pence yesterday in London. They’ve fallen 16 percent since news of the meeting broke. Bumi Resources fell as much as 6.1 percent to 2,325 rupiah in Jakarta, the biggest decline in more than three months, and traded at 2,350 rupiah at 11:29 a.m. local time.
‘Stop Damaging Company’
“Investors do not appear to share Borneo and Bakrie’s confidence about their proposal,” a spokesman for Rothschild who declined to be named said by e-mail. The move has “been disastrous for shareholder value and we expect that investors will make their views clear. We urge the Bakries and Mr. Tan to see sense and stop damaging the company.”
Ties with Rothschild were weakened in November when he made public a letter to CEO Hudaya calling for a “radical cleaning up” of Jakarta-based coal producer Bumi Resources (BUMI), in which Bumi Plc owns a 29 percent stake. Rothschild is a former co- chairman of New York hedge-fund firm Atticus Capital LLC and the son of U.K. financier Jacob Rothschild.
Rothschild wrote his letter a week after PT Bakrie & Brothers, a unit of Bakrie Group, agreed Nov. 1 to sell half its stake in Bumi Plc for $1 billion in cash to help pay a loan to Credit Suisse Group AG.
‘Hope Has Vanished’
“We had expected Rothschild’s presence would help improve corporate governance at the Bakrie Group, Bumi Plc and its subsidiaries including Bumi Resources,” said Frederick Daniel Tanggela, an analyst at PT Bahana Securities in Jakarta, who has a “hold” rating on the Indonesian unit. “But with the effort to oust Rothschild that hope has vanished.”
Rothschild, whose ancestor helped bankroll Britain’s war against Napoleonic France, raised 707.2 million pounds ($1.1 billion) in the 2010 initial public offering of Vallar Plc, which became Bumi after a $3 billion transaction involving Bakrie Group in November 2010.
“We wanted a board that is more harmonious than in the past,” Ken Allen, marketing director for Borneo, said in London. “It was thought that we needed to have the board focused and not distracted by any other interests. The focus is on Indonesia and the board have to have that expertise in Indonesia, and knowledge of Indonesia.”
Bakrie Group and Borneo Lumbung jointly own a 47.6 percent stake in Bumi Plc, according to Bakrie & Brothers.
“We’re absolutely confident that we’ll get the support,” Fong said.
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