Bumi Can’t Verify Some Spending at Berau Unit in IndonesiaThomas Biesheuvel and Jesse Riseborough
Bumi Plc, the coal company that has been at the center of a dispute between co-founders Nathaniel Rothschild and Indonesia’s Bakrie family, said it has been unable to verify some spending at its PT Berau Coal Energy unit.
Berau’s management decided there was “not sufficient evidence to support the capitalization of certain expenditures” estimated at about $56 million last year, Bumi said in a statement today. The spending will be treated as a cost in the 2012 income statement and excluded from underlying results.
Bumi said March 19 that it was delaying announcing earnings while it reviews the balance sheet of its 85 percent-owned Berau unit. Bumi, which plunged 69 percent last year in London trading, is working to separate from the Bakries after defeating an attempt by Rothschild to take control of the Bumi board. There’s a likelihood its full-year results, due April 24, will need to be further delayed, Bumi said today.
Management at Jakarta-based Berau had also been unable to fully verify about $38 million in land payments, Bumi said in its statement. The transactions at Indonesia’s fifth-largest coal producer are under review and a provision will be taken once this is complete.
Investors should ask why Bumi executives didn’t know about “such enormous payments,” Rothschild said today by phone.
Bumi fell 2 percent to 294 pence by the close in London. That values the company at 708 million pounds ($1.1 billion.)
“The new management at Berau, under new leadership from Bumi Plc, is intent on clarifying and rectifying these issues and is engaging with the previous management team to achieve this,” Bumi said in the statement. If “expenditures cannot be substantiated, Berau is seeking undertakings from any responsible parties that it will be properly compensated for the financial impact.”