Bumi Holders Back $501 Million Deal to Sever Bakrie TiesFirat Kayakiran and Jesse Riseborough
Investors in Bumi Plc, the coal producer at the center of an ownership dispute between its founders, approved a $501 million agreement to separate the company from one of its original Indonesian partners.
Shareholders backed the transaction that’s due to complete next month, Bumi said yesterday in a statement. The London-listed company said it will “shortly” start trading under a new name, Asia Resource Minerals Plc.
Bumi and Indonesia’s Bakrie family have been working on a split since last year after relations between the family and fellow founder Nathaniel Rothschild soured amid financial probes in Asia and the U.K. The company plans to return more than $400 million in proceeds from the separation deal to shareholders. The stock has dropped about 73 percent since the start of 2012.
“Bringing all parties together and creating a transaction that shareholders can unite behind has been a long and difficult process,” Chief Executive Officer Nick von Schirnding said in the statement. Yesterday’s vote allows Bumi to focus on its PT Berau Coal Holdings business in Indonesia, he said.
Rothschild, scion of a centuries-old British banking dynasty, owns about 15 percent of Bumi and controlled about 31 percent of the voting stock yesterday as some shareholders were barred from the ballot. The 42-year-old investor said last week he would support the separation deal in return for the right to nominate an independent director to the board.
The coal producer rose 3 percent to 235 pence by the close in London, the highest level since Nov. 12 and valuing Bumi at 566 million pounds ($928 million). It plans to pay a dividend of 103 pence a share after the transaction.
The two-stage separation agreement will see Chairman Samin Tan buying 23.8 percent of Bumi from the Bakries, making him the largest shareholder in the group with 47.6 percent of the company. The family will then pay $501 million for Bumi’s 29 percent stake in Jakarta-based PT Bumi Resources.
The deal leaves Bumi Plc with a 76 percent holding in PT Berau Coal.
Tan has said he will step aside once a replacement chairman is found. Von Schirnding said yesterday that the search for a new chairman is “progressing well” and Bumi has a short-list of three to four candidates.
A deposit by the Bakries of $50 million has been made into an escrow account with Deutsche Bank AG, with an additional $228 million needed to complete the transaction. The Bakries will lose the deposit if they fail to pay the balance by the Jan. 24 deadline, Von Schirnding said.