Rothschild Exits Indonesian Coal Venture, Ending Saga

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Financier Nathaniel Rothschild agreed to exit an Indonesian coal venture after a four-year saga that pit him against one of the country’s most powerful families and saddled him with multimillion-dollar losses.

Rothschild accepted 56 pence a share for his 17.2 percent stake in Asia Resource Minerals Plc from Asia Coal Energy Ventures, or ACE. That’s 37 percent more than an earlier bid and values ARMS’s equity at more than $200 million, his holding company said Monday in a statement.

Rothschild, the only son of British banker Jacob Rothschild, agreed in 2011 to invest $3 billion in the Indonesian coal industry through Vallar Plc, allowing the nation’s biggest producer of the fuel to list in London as Bumi Plc. The deal with Indonesia’s Bakrie family collapsed two years later, leading the Bakries to sever ties with the company.

After the breakup, Bumi’s name changed to ARMS though control remained in the hands of an Indonesian, Samin Tan. The ensuing struggle over governance combined with a slump in thermal-coal prices to send ARMS shares down 90 percent. Tan later missed loan payments for his 48 percent stake and surrendered some rights to his bankers.

Sinarmas Approach

Rothschild in February agreed to underwrite a $100 million equity raising to help ARMS renegotiate its debt and avoid a default. Those plans were derailed last month when ACE, backed by billionaire Eka Tjipta Widjaja’s Sinarmas Group, made a 41-pence-a-share offer. While Rothschild derided that bid, he abandoned plans to make an offer of his own with Russia’s SUEK Plc.

The fundraising would have increased Rothschild’s stake to 54 percent should shareholders have accepted the proposal.

The increased bid is almost four times ARMS’s share price in mid-April when ACE’s plans were first unveiled. Even so, the price contrasts starkly with Bumi’s debut at 10 pounds and its peak at 14 pounds in April 2011.

ARMS’s board is planning to convene a general meeting by the end of the month for shareholders to vote on the bid, the company said in a separate statement.

(An earlier version of this story incorrectly stated that ARMs’s board had recommended shareholders vote for the revised ACE offer.)

(Corrects ARMS voting details in final paragraph.)
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