Bumi Delays $501 Million Bakrie Deal on Funding Hold UpJesse Riseborough
Bumi Plc, the coal producer at the center of an ownership dispute between its founding partners, delayed a $501 million deal that will result in Indonesia’s Bakrie family exiting a company it helped set up in 2011.
Part of that plan -- the sale of the Bakries’ stake in Bumi to Chairman Samin Tan -- was postponed because the required financing isn’t in place, Bumi said late yesterday in a statement. The London-based company agreed to extend to Nov. 29 the deadline by which Tan must confirm he can fund his $223 million part of the deal to double his stake to 47.6 percent.
The Bakries are trying to disentangle themselves from Bumi after a dispute with another founding investor, Nathaniel Rothschild, a scion of the Rothschild banking dynasty. The Dec. 4 shareholder vote on the Bakries’ exit from the business will be adjourned because of the holdup on the Tan purchase.
Bumi said Tan has made “significant progress” in arranging the financing. Tan said yesterday in an e-mail he had secured bank funds to buy the 23.8 percent stake.
“We heard this morning that Tan had the money, we hear from the company this afternoon that he doesn’t -- we’d like to know who’s telling the truth,” Rothschild, 42, said yesterday by phone. He owns about 21 percent of the voting rights for Bumi’s stock and has argued against the sale to Tan, who has said he will step aside once a replacement chairman is found.
Tan is seeking to complete the financing today, with all the documentation in place barring one commercial item, the Wall Street Journal reported today, citing e-mailed comments from the Bumi chairman. Tan didn’t immediately respond to e-mailed questions from Bloomberg News today. A spokesman for Bumi declined to comment.
Bumi rose 3 percent to 217.25 pence by the close in London trading, valuing the company at 525 million pounds ($848 million).
Bumi, who’s precursor Vallar Plc sold shares in an initial public offering in London in 2010, owns stakes in two Indonesian coal suppliers. As part of the Bakries’ exit plan, Bumi has agreed to sell its 29 percent holding in Jakarta-based PT Bumi Resources to the family for $501 million. If that deal is completed, Bumi will be left with a 76 percent holding in PT Berau Coal Holdings.
Bumi had yet to receive proof that the Bakries can finance their share of the transaction, Chief Executive Officer Nick von Schirnding said on Nov. 8. Funding has been available since January in the form of a “direct cash investment” from the family, Chris Fong, a Bakries spokesman, said the same day.
Investors should oppose the separation plan, according to Pensions & Investment Research Consultants Ltd., a U.K. adviser to institutional investors, while ISS Governance Services said shareholders should approve it, reports this week showed.
Changes to the proposed transaction from its original form last year, uncertainty over how Tan and the Bakries will finance it and a failure to recover $173 million of missing funds underpin the voting recommendations, PIRC said.