Bumi to Hand Cash to Holders After $501 Million Bakrie Deal
Bumi Plc, the coal producer at the center of a dispute between financier Nathaniel Rothschild and Indonesia’s Bakrie family, plans a “substantial” cash return to investors from the $501 million sale of a mining asset.
The company, owner of stakes in two of Indonesia’s biggest exporters of power-station coal, agreed to sell its 29.2 percent stake in PT Bumi Resources (BUMI) to the Bakrie Group, it said in a statement today. The proposed transaction was first announced on July 11 and is part of a two-step plan to separate Bumi Plc from the Bakries.
Bumi has been at the heart of a battle for control between co-founders Rothschild, scion of a centuries-old British banking dynasty, and the Bakries, one of the country’s wealthiest families. Each made rival proposals last year to unwind the $3 billion deal that brought them together in 2011. Earlier this month Bumi Chairman Samin Tan agreed to buy the Bakrie family’s 23.8 percent holding in Bumi Plc (BUMI) for $223 million.
The sale leaves the company with more than $500 million in cash and the board “intends to return a substantial proportion to shareholders in the near-term,” London-based Bumi Plc said.
The current market value of the PT Bumi stake is $314 million, it said. The transaction will be put to its shareholders at a general meeting planned for the autumn, the company said.
The terms of the sale “are highly attractive to Bumi shareholders,” Julian Horn-Smith, Bumi’s senior independent director, said in the statement. “However, more needs to be done before we are able to present a comprehensive package for shareholders to consider.”
Selling the Bumi Resources stake to the Bakries was a condition for a deal that sees the family selling its 23.8 percent holding in Bumi Plc to Tan’s PT Borneo (BORN) Lumbung Energi & Metal. The exit of the Bakries as investors will allow Bumi to reorganize its board, including appointing a new independent chairman, Bumi said.
Trading of Bumi stock has been suspended in London since April 19 when it last traded at 259.3 pence. The company said last month it remained in talks with the U.K.’s Financial Conduct Authority to end the suspension. No update on the resumption of trading was provided in today’s statement.
Bumi will be removed from all FTSE indexes at zero value on July 25 should it remain suspended July 22, according to a statement today from the stock index compiler.
Bumi said Feb. 12 that the “core financial terms” of a deal involving the Bakrie Group canceling its 23.8 percent stake in the London-traded company, in exchange for 10.3 percent of Bumi Resources and $278 million, were “fixed.”
Rothschild, who owns a 14.8 percent stake in Bumi, today criticized the handling of the separation from the Bakries.
“The proposed transaction is unrecognizable from the one that was described on Feb. 12 as being ‘fixed,’” he said in e-mailed comments. “No independent chairman in their right mind will want to be involved with a company which, if this deal is allowed to stand, will be continue to be controlled by the Bakrie Concert Party via Samin Tan.”
U.K. regulators should step in to “ensure the interests of independent shareholders are protected,” he said.
Separately, Rothschild has started legal proceedings against Bumi and other parties including Tan, director Alex Ramlie and entities related to the Bakries, according to an e-mailed statement from the company.
“These proceedings are an unnecessary distraction and serve no useful purpose,” Bumi said today. The court’s timetable means there are unlikely to be any “material steps” in the litigation until after the planned shareholder vote, it said.
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