Bumi Agrees to Recover Missing $173 Million From Former Director

Bumi Plc, the Indonesian coal producer trying to recover $201 million in missing funds, said it agreed to recover the majority of the money in a deal with former company director Rosan Roeslani.

Roeslani, the former chief executive officer of Bumi’s PT Berau Coal Energy unit, will transfer Berau assets and cash valued at $173 million while Bumi will waive potential claims against him over the missing funds, it said yesterday in a statement. The agreement must be approved by shareholders.

Bumi has been at the center of a battle for control between co-founders Nathaniel Rothschild, scion of a centuries-old British banking dynasty, and Indonesia’s Bakrie family since the $3 billion deal that brought them together started to sour in late 2011. Waning coal prices, board infighting and probes in the U.K. and Indonesia have weighed on the stock, which plunged 69 percent in London last year.

The missing assets to be recovered from Roeslani include a shareholding in a company that transports all coal produced by Berau and another that owns the land it uses for its operations, London-based Bumi said. The agreement with Roeslani states he has made no admission of wrongdoing or liability, Bumi said.

Roeslani didn’t respond to an e-mail seeking comment.

“It is not up to the company to decide whether or not he can be exonerated,” Rothschild said in e-mailed comments to Bloomberg News. “The London regulators need to take action to send a message to foreigners who believe listing in London is a pushover.”

SFO Talks

CEO Nick von Schirnding told reporters yesterday at Bumi’s annual general meeting in London that the company had held talks with the U.K. Serious Fraud Office on the matter.

Bumi said last month that Roeslani received “substantially more” in salary, bonuses and other benefits than had previously been disclosed. He was paid $3.8 million in 2011, according to Bumi’s annual report, published May 31. In last year’s annual report, Roeslani was said to have received $700,638 in salary and bonus for 2011.

Roeslani said the details in the May 31 report were “baseless, one-sided, and appear to be motivated by the need to deal with the ongoing Bumi shareholder dispute,” according to a June 12 statement.

The creation of Bumi brought together Rothschild and the Bakries, a family-owned palm oil-to-property empire founded in Sumatra in 1942. Bumi and the Bakries announced a deal to unwind their investment in October that involved the Bakries exchanging their 23.8 percent of Bumi Plc for 29.2 percent of PT Bumi Resources in a cash-and-share-swap deal, leaving Bumi Plc in control of Berau Coal.

$278 Million

According to the terms of the deal, the cash component would be $278 million to buy PT Bumi stock at 680 rupiah a share. The stock closed yesterday at 530 rupiah in Jakarta. A shareholder vote on the agreement, previously scheduled for yesterday’s AGM, was likely to be completed “before autumn,” Von Schirnding said last month.

“While the mechanics of the separation are still being worked on, I am confident we are nearing the end of this process,” he said yesterday.

Bumi has previously sought assurances from the Bakries that they will be able to fund the cash component of their offer.

Full Funding

The Bakrie Group said this week it had the full amount of funds available to complete the deal and was waiting to hear from the board of Bumi on “how they wish to proceed.” Chris Fong, a spokesman for the Bakries, didn’t respond to phone calls and an e-mail yesterday.

Bumi said last week it remained in talks with the U.K.’s Financial Conduct Authority to end a two-month suspension of its stock trading in London. Talks with the regulator focused on work to “enhance its internal systems and controls” at Berau Coal, it said.

Bumi shares closed at 259.3 pence on April 19, the last day they were traded.

Pensions & Investment Research Consultants Ltd., which advises institutional investors with combined assets of more than 1.5 trillion pounds ($2.3 trillion), said last week it had concerns that corporate governance at Bumi was inadequate and recommended shareholders vote against Chairman Samin Tan.

Tan was re-elected as a director yesterday with 71 percent of shareholders voting in his favor. All other directors seeking re-election, excluding Richard Gozney, got between 70 and 72 percent of votes. Four resolutions failed including one giving the board the authority to issue its own shares.

Stake Value

“The voting demonstrates that shareholders are not willing to allow this board one ounce of flexibility,” said Rothschild, the second-largest shareholder.

Tan’s PT Borneo Lumbung Energi and Metal invested $1 billion into Bumi more than a year ago in buying half of the Bakrie Group’s shareholding. He said yesterday the value of his 23.8 stake in the group has dropped about $800 million.

Tan and the Bakries have been in talks to dissolve their joint venture that holds the shares in Bumi since last year. The dissolution of the venture should be completed “very soon,” he said yesterday.

Tan said last year he was seeking to recoup “notional losses” on the investment in the talks with the Bakries. Yesterday he said there was no “side deal” with the Bakries and there’s no so-called make-whole accord allowing him to recover his entire investment.