July 9 (Bloomberg) -- Bumi Plc, the Indonesian coal producer at the center of an ownership dispute, is close to a $508 million deal that will see one of its co-founders, the Bakrie family, exit from their investment in the group, according to two people familiar with the situation.
As part of the two-stage plan, the Bakrie Group is in talks with Bumi Chairman Samin Tan to sell him their entire 23.8 percent holding in London-listed Bumi, the people said, asking not to be identified as the discussions are confidential. The Bakries would use the funds from the sale to buy back a 29.2 percent holding in PT Bumi Resources, Indonesia’s largest coal exporter, which they sold to Bumi Plc in 2011, the people said.
Under the proposal, the Bakries would buy back 10.3 percent of Bumi Resources for $230 million and the rest of Bumi Plc’s stake for $278 million, the people said. Bumi Plc is studying returning the proceeds to shareholders through a special dividend, one of the people said. Terms of the Bakries’ sale of their Bumi Plc stake to Tan aren’t known.
Bumi has been at the heart of a battle for control between co-founders Nathaniel Rothschild, scion of a centuries-old British banking dynasty, and Indonesia’s Bakrie family since the $3 billion deal that brought them together started to sour in late 2011. Bumi, which slumped 69 percent in London trading last year, has been seeking to sever ties with the Bakries since October amid investigations in the U.K. and Indonesia.
London-based spokesmen for Bumi Plc and the Bakries declined to comment. Tan couldn’t be reached through calls to his mobile phone. Alexander Ramlie, president-director of Tan’s PT Borneo Lumbung Energi & Metal, declined to comment.
Tan, who already owns 23.8 percent of Bumi Plc in a joint venture with the Bakries, is expected to get a waiver from U.K. regulators allowing him to double his stake by buying out the Bakries without having to make a general offer to shareholders, one of the people said. Under a proposal made in October, Bumi was to buy back the Bakries’ stake and cancel the shares.
“This is Samin Tan’s side deal, taking control without paying a premium and denying minority shareholders the potential upside that all would have enjoyed equally from buying back the stake,” Rothschild said in e-mailed comments to Bloomberg News. “This behavior is exactly what U.K. regulators and competent boards are designed to protect against,” he said, repeating a demand that Tan resign immediately.
Rothschild has also asked the U.K.’s financial regulator to probe whether Bumi made misleading statements about a proposed deal with the Bakries, according to a copy of a July 4 sent by Rothchild’s lawyers to the Financial Conduct Authority and seen by Bloomberg.
Tan has agreed to step down as chairman once a replacement is found. His Borneo Lumbung Energi invested $1 billion in Bumi Plc more than a year ago in buying half of the Bakries’ stake.
Tan said last month he had lost about $800 million on the value of the investment and has no side deal with the Bakries. Borneo’s Ramlie said on July 4 that a deal separating the venture with the Bakries was expected to be concluded at the weekend.
Bumi and the Bakries announced in October a proposal to unwind their investments that involved the Bakries exchanging their stake in Bumi Plc for 29.2 percent of PT Bumi Resources in a cash-and-shares deal.
That transaction required the Bakries to pay $278 million in cash for 18.9 percent of Bumi Resources stock at 680 rupiah a share. The shares fell 2.1 percent to 475 rupiah by the close in Jakarta today. A sale of its Bumi Resources shares would leave the London-listed company with an 85 percent holding in PT Berau Coal Energy, the fifth-largest Indonesian exporter, as its only asset.
Bumi Plc shares have been halted from trading in London since April 19 and talks with the U.K.’s Financial Conduct Authority to end the suspension have focused on bolstering “internal systems and controls,” the company said June 21. The stock last closed at 259.3 pence on April 19, giving Bumi a market value of 625 million pounds ($929 million).
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