Bumi Plc, the Indonesian coal producer at the center of an ownership dispute, is close to completing a deal valued at more than $500 million to sever its ties with co-founders the Bakrie Group after relations soured.
Bumi, noting recent press reports, said it’s near an accord to sell 29.2 percent of PT Bumi Resources to one of Indonesia’s wealthiest families as part of a nine-month-old plan to unwind an investment. At the same time, a group controlled by Bumi Chairman Samin Tan is in talks with the Bakries to buy their 23.8 percent of London-listed Bumi, it said in a statement.
A deal would mark the end of an almost two-year affiliation with the Bakries, a family-owned palm oil-to-property empire founded in Sumatra in 1942. They co-founded the company in a $3 billion venture with Nathaniel Rothschild which started to sour last year amid board infighting, a slump in coal prices and financial probes in the U.K. and Indonesia, the biggest exporter of power station coal.
Bumi and the Bakries first announced a proposal to sever ties in October. Talks continue and the “economic terms remain consistent” with the original plan with the Bakries paying more than $500 million in cash, Bumi said today.
Rothschild, who owns about 15 percent of the company, said he won’t support the proposal to separate the group from the Bakries. In e-mailed comments to Bloomberg News he claims Bumi Chief Executive Officer Nick von Schirnding has misled investors into believing the terms of the October proposal were fixed.
“We were led to believe by the board that the original proposal was fixed in stone and in reality we’ve been led up the garden path one more time and this time the minority investors can block it, should block it and demand a transaction that we thought was fixed,” Rothschild said in a phone interview.
Bumi has been at the heart of a battle for control between Rothschild, scion of a centuries-old British banking dynasty, and the Bakries with both making rival proposals to unwind the deal. Bumi, which slumped 69 percent in London last year, has been suspended from London trading since April. Selling its stake in PT Bumi would leave the company with an 85 percent holding in PT Berau Coal Energy, Indonesia’s fifth-largest exporter of energy coal.
As part of a two-stage plan, the Bakries are in talks with Tan, Bumi’s chairman, to sell him their entire 23.8 percent holding in London-listed Bumi, people familiar with the plan told Bloomberg this week. That would double his holding to 47.6 percent.
Tan’s PT Borneo Lumbung Energi & Metal has made a cash offer and talks are continuing, the Bakrie Group said today in an e-mailed statement. “A total cash alternative adds weight to the unwinding process, and we hope minority shareholders will share this view,” the group said in the statement. The offer is value accretive to Bumi and shareholders, it said.
The Bakries would use the funds from the sale to buy their holding in Bumi Resources, Indonesia’s largest coal exporter, which they sold to Bumi Plc in 2011, for $508 million, the people said. Bumi is considering returning the funds to its shareholders as a special dividend, one of the people said.
Rothschild today proposed that the Bakrie’s stake be offered to existing shareholders rather than sold to Tan who could then underwrite the offer and be free to buy any stock not taken up, Rothschild’s NR Investments Ltd. said in a statement. The revised separation proposal deprives investors of upside “just when thermal coal fundamentals are starting to improve,” according to the statement.
Bumi today said it has been made aware of talks between the Bakries and PT Borneo affiliate Lumbung Energi & Metal about Borneo buying the Bakries’ Bumi stake. Such a deal would be conditional on Bumi selling its Bumi Resources stake to the Bakries, it said.
A condition of a purchase by Borneo of the Bakries’ stake in Bumi is that the London-based company’s independent shareholders waive the requirement for Borneo Lumbung to make a general offer, Bumi said.
Bumi directors affiliated with Borneo Lumbung have recused themselves from the process, and the separation transactions are being studied by an independent committee of the board, it said.