Bumi Delays $501 Million Bakrie Exit Over Tan Funding Concern

Bumi Plc (BUMI), a producer of coal over whom its founding investors have been fighting for control, delayed a $501 million plan by Indonesia’s Bakrie family to exit the company.

Part of that plan -- the sale of the Bakries’ stake in Bumi to the company’s chairman, Samin Tan -- was postponed because the required financing isn’t in place, Bumi said today in a statement. The London-based company agreed to extend to Nov. 29 the deadline by which Tan must confirm he can fund the $223 million deal.

The Bakries are trying to disentangle themselves from Bumi after a dispute with another founding investor, Nathaniel Rothschild, a scion of the Rothschild banking dynasty. As a result of the holdup on the Tan purchase, Bumi said a Dec. 4 shareholder vote on the Bakries’ overall exit from the business will be adjourned.

Bumi said Tan has made “significant progress” in arranging the financing. Tan said earlier today in an e-mail he had secured bank funds to buy the 24 percent stake.

“We heard this morning that Tan had the money, we hear from the company this afternoon that he doesn’t -- we’d like to know who’s telling the truth,” Rothschild, 42, said by phone.

Rothschild, who owns about 21 percent of the voting rights for Bumi’s stock, has argued against the sale to Tan. Should the deal go ahead, Tan’s Bumi interest would double to 48 percent.

Bumi, which sold shares in an initial public offering in London in 2010, owns stakes in two Indonesian coal suppliers. As part of the Bakries’ exit plan, Bumi has agreed to sell its 29 percent holding in Jakarta-based PT Bumi Resources to them for $501 million. If that deal is completed, Bumi will be left with a 76 percent holding in PT Berau Coal Holdings.

Family Funding

Bumi had yet to receive proof that the Bakries can finance their share of the transaction, Chief Executive Officer Nick von Schirnding said on Nov. 8. Funding has been available since January in the form of a “direct cash investment” from the family,’’ Chris Fong, a Bakries spokesman, said the same day.

Investors should oppose the separation plan, Pensions & Investment Research Consultants Ltd., a U.K. adviser to institutional investors, said in a report dated yesterday.

Changes to the proposed transaction from its original form last year, uncertainty over how Tan and the Bakries will finance it and a failure to recover $173 million of missing funds underpin the voting recommendations, PIRC said.

ISS Governance Services recommended shareholders vote to approve the deal, according to a report dated yesterday.

Bumi rose 2.4 percent to close at 211.50 pence in London trading, valuing the company at 510 million pounds ($821 million).

To contact the reporter on this story: Jesse Riseborough in London at jriseborough@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net

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