Wallace King, proposed by Nathaniel Rothschild as the new Bumi Plc chairman, expects to win enough backing from shareholders next month to oust incumbent Samin Tan as a battle for control of the Indonesian coal venture rages.
“We will get the votes,” King said in an interview, referring to Rothschild’s bid to replace 12 directors at Bumi amid a probe into alleged financial irregularities. “I think it’s very, very clear that there’s been a lot of strange transactions and I think those transactions when exposed to the light of day will not stand up.”
Rothschild’s foray two years ago into Indonesian coal through a $3 billion deal with the country’s Bakrie family, controllers of a palm-oil-to-property empire, began to sour in late 2011, leading him to quit the board last October. He’s now seeking to regain control of the group he co-founded with the Bakries and has accused management and Tan of failing investors.
“Bumi Plc obviously has a number of serious issues and I’m not a close associate of anyone, and I think there will be some challenges to sort the company out and restore shareholder value,” King told Bloomberg Television in Davos yesterday. “I’ve known Nat for many years and he’s not a close associate of mine.”
Conflict over the $1.3 billion London-traded coal company intensified this month as Bumi agreed to a February shareholder meeting to vote on Rothschild’s motion to oust directors including Tan and Chief Executive Officer Nick von Schirnding. Boardroom infighting and financial probes in the U.K. and Indonesia prompted Rothschild and the Bakries to seek to unwind their collaboration. The date for the meeting is not yet set.
“I’ve either had conversations with or met all of our top 20 largest shareholders and I have no doubt we will win,” von Schirnding said by phone from London. Tan is ready to stand down as chairman after steering the company through the “current phase of the crisis.” Bumi is advancing a $430 million proposal that would sever ties with the Bakries by exiting its investment in the family’s PT Bumi Resources, he said.
King, 68, was CEO of Sydney-based Leighton Holdings Ltd., Australia’s biggest construction company, for 23 years before retiring at the end of 2010. He and Rothschild have also seen Bumi shareholders to build support before the vote.
“We met with a number of investors in London,” King said. “They can see the issues. They want to go forward on a positive basis. In pretty much all of the interviews I’d say the body language was quite positive.”
A London-based spokesman for Tan declined to comment.
Bumi said this week it may seek to recover missing funds, identified in a four-month probe by law firm Macfarlanes LLP, without specifying a figure. Rothschild said the lawyers’ report assessed the possible misappropriation of as much as $1 billion. Bumi owns stakes in two Indonesian coal producers: 29 percent of Bumi Resources and 85 percent of PT Berau Coal Energy.
“It’s a matter of turning this company into a profitable company and correcting the wrongs and seeing that related-party transactions don’t happen in the future to the benefit of some shareholders over other shareholders,” King said.
Bumi has been in talks with authorities in Indonesia and the U.K., including the Serious Fraud Office, over the probe. It said it’s investigating “all recourse options available,” while declining to make the Macfarlanes findings public.
“If it’s clearly established that there’s been wrongdoings, I think those wrongdoings should be followed up and prosecuted,” King said. “On the information that I’ve looked at, there’s a number of related-party transactions that I don’t think will stand up in the light of day.”
Rothschild holds about 14.8 percent of the voting rights in Bumi and 18.2 percent of the votes for next month’s meeting. As well as putting forward King, in January he proposed Brock Gill as CEO and himself as an executive director.
He also nominated Hashim Djojohadikusumo, 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 Bakries said at the time the proposal was “yet another distraction” and an “unjustified attempt to exert control over the company to the detriment of other shareholders.”
Tan became chairman of the group in March after purchasing half of the Bakries’ 47.6 percent stake for $1 billion two months earlier. In an interview this month, Tan said he had enough support to stop Rothschild’s bid and was in talks with key shareholders over backing his strategy for the company.
“It depends what shareholders want,” von Schirnding said. “If they want to maximize shareholder value, we offer a solution. This board offers a solution which we believe we -- more than any board -- can deliver, which is the separation from the Bakrie Group and Bumi Resources.”
Bumi Plc has slumped 62 percent in the past 12 months. It declined 1 percent to close at 334 pence in London today.
Rothschild started the company in 2010 with a vision of building Bumi into an Indonesian “resources champion.”
“There’s a long way to go on this,” King said. “If we can clean up the company and restore value and do the right thing, pay dividends, have a profitable company, I think then the original vision can be followed.”