Nathaniel Rothschild’s struggle to salvage what he can from a painful foray into Indonesian coal is being confounded by the banker who introduced him to the business.
Tensions between Rothschild and Ian Hannam, 59, a veteran of commodities finance, were renewed Thursday with a formal takeover offer for Asia Resource Minerals Plc by an Indonesian group advised by the boutique firm that carries Hannam’s name.
Asia Coal Energy Ventures, or ACE, offered 41 pence for each ARMS share, it said in a statement. That values ARMS, owner of 85 percent of Indonesia’s PT Berau Coal Energy, at 98.8 million pounds ($150.5 million), almost triple its price on April 13, the day before the plans were first unveiled. Its shares rose 5.9 percent to 40.5 pence at the close in London.
Hannam brokered the 2010 deal that brought Rothschild, 43, into Indonesia’s coal industry. The $3 billion transaction with Indonesia’s powerful Bakrie family led to the creation of Bumi Plc. The relationship subsequently soured amid financial probes in Asia and the U.K., and in 2013 Bumi changed its name to ARMS after a $501 million operation to sever ties with the Bakries.
ACE has provisionally agreed with Austria’s Raiffeisen Bank International AG, which controls 23.8 percent of ARMS, to buy loans it made to companies controlled by former ARMS Chairman Samin Tan for $120 million, according to Thursday’s statement. ACE is advised by Hannam & Partners and funded by Indonesian billionaire Eka Tjipta Widjaja’s Sinarmas Group.
The bid threatens a rescue plan by ARMS founder Rothschild, who controls 17.5 percent of the shares. In February, the financier agreed to underwrite $100 million of equity to help ARMS renegotiate $950 million of debt to avoid default, with shareholders due to vote on the plan on May 14.
ACE has promised to inject $150 million into ARMS. Its bid requires a simple majority of independent shareholders to approve the Raiffeisen loan purchases. ARMS’s financial adviser must also confirm the terms of that agreement as “fair and reasonable,” the London-based company said in a separate statement.
The company’s adviser will have to value the assets held as collateral by Raiffeisen and if the split isn’t judged to be fair, ARMS may not put ACE’s offer to minority holders, a spokesman for Rothschild’s NR Holdings Ltd. said Thursday by telephone.
ACE’s loan-purchase agreement values Raiffeisen’s interest in ARMS at $35 million and other assets at $85 million. In October, Tan lost half his stake along with other assets put up as collateral to the bank after failing to meet the terms of a $224 million loan he took out in 2013 to buy the shares.
ACE is managed by Hong Kong-based Argyle Street Management Ltd., an $850 million hedge fund run by Kin Chan, formerly the Asia chief of Lazard Ltd. Argyle owns a 5.7 percent stake in ARMS. Hannam & Partners was founded by the banker after he left JPMorgan Chase & Co.
“ACE did not engage with the company in respect of the offer prior to today’s announcement,” ARMS said in the statement. “The company is currently analyzing the ACE cash-offer announcement and will provide an update in due course.”