Bumi Plc (BUMI), the coal producer that plunged 69 percent last year amid a dispute over control, set up a February showdown with co-founder Nathaniel Rothschild after the financier moved to take over the company.
London-listed Bumi agreed late yesterday to Rothschild’s request for a shareholder meeting to throw open 12 of its 14 board seats at an unspecified date next month. Rothschild said in a letter yesterday that the board had failed, saying new CEO Nick von Schirnding and Chairman Samin Tan are among members that should be replaced.
Bumi was founded by Rothschild and the Bakrie Group, a family-owned empire with investments in palm oil to property, in a $3 billion deal in 2010 that grouped stakes in two Indonesian coal producers. Its market value has since slumped 695 million pounds ($1.1 billion) as boardroom infighting and financial probes prompted moves by both parties to unwind their collaboration, and Rothschild has sought support for a plan to remove the Bakries as shareholders of Bumi.
“The calling of this general meeting will offer shareholders a clear choice between the board and its strategy of separation from the Bakrie Group, approved unanimously by the independent directors, and Nat Rothschild and his associates,” von Schirnding said in the statement.
Rothschild, who holds 14.7 percent of the voting rights in Bumi, proposed former Leighton Holdings Ltd. (LEI) head Wallace King as chairman, Brock Gill as CEO and himself as an executive director. He also nominated Hashim Djojohadikusumo, as well as Roger Davis, Jonathan Djanogly, a conservative member of the U.K. parliament and former justice minister, and Richard Gozney. Gozney is a former British ambassador to Indonesia.
The changes in personnel would benefit Bumi, the Financial Times cited Richard Buxton, the head of U.K. equities at Schroders Plc (SDR), as saying yesterday. Schroder Investment Management Ltd. had a 3.51 percent stake in Bumi as of Oct. 3 last year, according to data compiled by Bloomberg.
“The current board of Bumi has failed in its duties to minority shareholders and has mismanaged the Bumi group,” NR Investments Ltd., controlled by Rothschild, said in yesterday’s statement. “The independence of the majority of the current members of the board should be re-examined in the light of their other interests and relationships.”
Bumi said last month it had rejected a five-step plan from Rothschild regarding its coal assets. Rothschild made his proposal after the Bakrie Group in October offered $1.2 billion to buy all of Bumi’s producing assets -- a 29 percent stake in PT Bumi Resources (BUMI) and an 85 percent holding in PT Berau Coal Energy. Morgan Stanley is advising NR Investments.
Bumi is instead proposing a $430 million plan that would see it sever ties with the Bakrie family and exit its investment in Bumi Resources. The plan consists of the first part of the Bakrie Group proposal made in October. Recent share price movements have made the offer “more attractive” for Bumi Plc holders, the company said yesterday in a presentation.
Output at Berau Coal is expected to meet guidance of 21 million metric tons for 2012, rising 9.5 percent to 23 million tons this year, Bumi Plc said yesterday in a separate statement. Selling prices for coal in 2012 were about $70 a ton, lower than the $81.40 a ton a year earlier, it said. The company has deferred some expansion plans following price declines.
“Our near-term strategy is very clear: to effect a separation from Bumi Resources and to maximize value in our operating subsidiary, Berau,” von Schirnding said in the statement. The company is also reviewing the board structure, it said in the presentation on its website.
Rothschild’s proposal is “yet another distraction from him which, like most of his initiatives, is an unjustified attempt to exert control over the company to the detriment of other shareholders,” the Bakrie Group’s Long Haul Holdings Ltd. said yesterday in an e-mailed statement. “We believe shareholders will see his attempt to reappoint himself and his nominees to the board as a retrograde step.”
Jakarta-based Bumi Resources gained as much as 6.6 percent to 650 rupiah and traded at 640 rupiah at 9:56 a.m. local time, trimming its decline in the past year to 73 percent. Berau Coal climbed 4.9 percent toady, taking its 12-month drop to 51 percent. Bumi Plc rose 7.4 percent to close at 288.5 pence in London yesterday.
Bumi Plc said last month it had received a near-final version of a report by law firm Macfarlanes LLP after a probe that began in September into potential financial “irregularities” at some of its Indonesian operations.
The U.K. Takeover Panel ruled last month that the Bakrie Group and PT Bukit Mutiara, which together control 50.3 percent of the voting rights in Bumi Plc, are regarded as “acting in concert.” They must reduce those rights to less than 30 percent by disposing of shares, the panel said in a statement.
“Wal King, Roger Davis, Jonathan Djanogly, and Richard Gozney are individuals of the very highest caliber, who each bring specific, relevant expertise to a board badly in need of rejuvenation,” Rothschild said in a separate e-mail. “They are truly ‘independent’.”
“It will be interesting to see if Nat can get this approved by shareholders,” Wilianto Ie, the Jakarta-based head of Indonesia equities research at PT Nomura Indonesia, said by e-mail. “The nomination of Hashim Djojohadikusumo as a board member by NR Investments suggests Djojohadikusumo as a potential alternative new investor.”
Djojohadikusumo couldn’t immediately be reached for comment. Dileep Srivastava, a Bumi Resources director, declined to comment.
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