Rothschild Proposal for Bumi Plc Rejected by Borneo Lumbung
PT Borneo Lumbung Energi & Metal (BORN) rejected a proposal from Nathaniel Rothschild to sell its stake in Bumi Plc, the company at the center of a dispute between Rothschild and Indonesia’s Bakrie Group.
The proposal also involves a share sale by Bumi Plc, Alexander Ramlie, president director at Jakarta-based Borneo, said in a statement yesterday. The company received the offer from Rothschild through his financial adviser Morgan Stanley.
Rothschild is seeking support for his plan to remove the Bakrie Group as shareholders of Bumi Plc. The London-listed vehicle was founded by Rothschild and the Bakries, a family- owned palm oil-to-property empire, in a $3 billion deal in 2010 that grouped stakes in two Indonesian coal producers.
“This lowers the chances for Rothschild’s proposal to win,” Ikhsan Binarto, an analyst at PT Indo Premier Securities, said by phone from Jakarta.
Borneo, which has a 23.8 percent stake in Bumi Plc, fell 1.8 percent to 560 rupiah by the close of trading in Jakarta. Bumi Plc, which has slumped 69 percent this year in London, was 0.6 percent lower at 268.9 pence at 9:40 a.m.
Rothschild made his proposal after the Bakrie Group in October offered $1.2 billion to buy all of Bumi Plc’s assets -- a 29 percent stake in PT Bumi Resources (BUMI) and an 85 percent stake in PT Berau Coal Energy. Rothschild’s offer requires Borneo Lumbung and PT Bukit Mutiara, to sell their holdings in the London-listed group, Bumi Plc last week.
“We have considered the proposal and have elected not to accept it,” Borneo’s Ramlie said in the statement. The company isn’t in talks with Rothschild or his advisers about the offer, he said.
Bakrie Group has offered to swap its 23.8 percent stake in London-listed Bumi Plc for 10.3 percent of Bumi Resources, Bumi Plc said in October. The Bakries proposed to buy back the remaining 18.9 percent in Bumi Resources by Christmas and to make an offer for Bumi Plc (BUMI)’s 84.7 percent stake in Berau Coal within six months.
Rothschild’s five-step proposal includes issuing new shares equal to 25 percent of the current share capital at the prevailing Bumi share price, according to a Dec. 12 statement from Bumi Plc. That would help fund an offer to purchase the 23.8 percent stake in Bumi held by Borneo and a 9.8 percent holding of fellow investor Bukit Mutiara for the same price. His offer to unwind the Bakrie’s investment is identical to the Bakrie family’s own proposal, according to the statement.
The competing proposals for Bumi Plc come amid boardroom infighting that’s seen Rothschild, who controls about 12 percent of Bumi Plc voting stock, and Co-Chairman Indra Bakrie resign, and as investigators in London and Indonesia probe possible financial anomalies.
“It is very strange that at the beginning of October Borneo chose to accept Bakrie’s highly conditional 427 pence offer within hours of it being tabled, describing it as ‘very fair,’ but won’t entertain a superior proposal backed by real cash from another party,” Rothschild said today in e-mailed comments to Bloomberg News.
Rothschild has made repeated demands for Chairman Samin Tan and Rosan Roeslani, a director who indirectly controls about 13 percent of Bumi Plc, to resign. The financier said last week that he may seek to remove the board of the coal venture.
Bumi Plc said Dec. 12 it’s working to cut its association with the Bakries and sell a 29 percent interest in Jakarta-based Bumi Resources “as soon as practical.” It promoted Nick von Schirnding, head of communications and investor relations, to chief executive officer effective Dec. 31 after Nalin Rathod told the board he planned to step down.
Rothschild said last week his proposal has the support of Bumi Plc’s top five institutional shareholders, including Abu Dhabi Investment Council, Schroders Investment Management Ltd., Standard Life Investments, Taube Hodson Stonex LLP and Artemis Investment Management LLP.
Bumi Plc announced Sept. 24 an inquiry into “potential financial and other irregularities” at its Indonesian operations, Bumi Resources and Berau Coal. The company has received a near-final version of a report by law firm Macfarlanes LLP, which is handling the probe, it said last week.
The London-listed venture “is evaluating all legal and commercial options available to it and has been engaging actively with U.K. regulators and will continue to do so as appropriate,” Bumi Plc said Dec. 12. Its own investigation has discovered that information linked to the probe was obtained illegally by e-mail hacking, it said.
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