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Rothschild Sends Bumi Alternative Proposal to Bakries’ Offer

Financier Nathaniel Rothschild
Financier Nathaniel Rothschild has appointed Morgan Stanley to advise him and held talks with potential new investors as well as current holders of Bumi, a person familiar with the matter said last week. Source: Finsbury Ltd. via Bloomberg

Bumi Plc, the London-traded Indonesian coal producer, said financier Nathaniel Rothschild submitted an alternative proposal to a $1.2 billion offer the company received for its assets from the Bakrie Group.

The proposal was contained in a letter from Rothschild’s NR Investments, Bumi said in a statement today. It gave no details of the proposal and said it would be evaluated by Bumi Plc’s financial advisers, Rothschild Group.

Rothschild, 41, has appointed Morgan Stanley to advise him and held talks with potential new investors as well as current holders of Bumi, a person familiar with the matter said last week. An offer from Rothschild, scion of a centuries-old banking dynasty, would intensify a feud with Indonesia’s Bakrie family as both seek to unwind the $3 billion transaction that brought them together in 2010 after it began to sour last year.

“We don’t think a superior cash offer from Rothschild seems likely,” analysts from Liberum Capital Ltd. wrote in a note to clients today.

Bumi Plc owns stakes in two coal producers -- 29 percent of PT Bumi Resources, Indonesia’s biggest producer of the power-station fuel, and 85 percent of PT Berau Coal Energy Tbk. “Any proposal surrounding Berau will relate more to a change in the share register rather than a cash offer,” Liberum said.

London Listing

The group led by Rothschild isn’t planning a rival bid to the Bakrie family’s $947 million offer for Bumi’s stake in Berau Coal, the person familiar with the proposal said. The financier and his associates are seeking to maintain a U.K. listing and resolve corporate governance issues, the person said.

Bumi dropped 1.1 percent to 280 pence at 8:24 a.m. in London. Bumi Resources declined 3 percent to 650 rupiah as of 3:34 p.m. Jakarta time and Berau Coal Energy sank 6.3 percent to 225 rupiah.

Bumi Plc said Sept. 24 it was starting a probe into potential financial “irregularities” at its Indonesian investments. The board will make no recommendation on any possible transaction until the investigation is “appropriately advanced,” the company said in today’s statement.

The Bakries, who run a palm-oil-to-property empire that started in Sumatra in 1942, last month offered to buy all of the assets of London-listed Bumi in a bid to help resolve “irreconcilable differences” with Rothschild and his fellow founders. Rothschild has described their offer as not being in the interests of investors.

Bumi Plc supports a plan to exit its stake in PT Bumi Resources, as it seeks to sever ties with the Bakries, two people familiar with the matter said last month.

It isn’t currently considering the Bakries proposal to buy within six months its stake in Berau Coal Energy, the people said. Bumi Plc hasn’t ruled out accepting a more formal bid for Berau in the future, they said.

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