Bloomberg News

Rothschild Said to Hire Morgan Stanley for Rival Bumi Plan

November 02, 2012

Nathaniel "Nat" Rothschild

Nathaniel "Nat" Rothschild. Source: Finsbury Ltd. via Bloomberg

Nathaniel Rothschild, who quit the board of Bumi Plc last month, has appointed Morgan Stanley to advise him on a plan to counter a $1.2 billion proposal for the assets of the London-traded Indonesian coal producer, a person familiar with the matter said.

Rothschild, who founded Bumi with Indonesia’s Bakrie family in 2010, has held talks with potential new investors as well as holders in Bumi, the person said, requesting anonymity as the discussions are private. The plan, which is at an advanced stage, would remove the Bakries, Chairman Samin Tan and PT Recapital Asset Management as Bumi investors, the person said.

A move by Rothschild, scion of a centuries-old banking dynasty, to counter the Bakries’ offer for Bumi’s assets would intensify a feud that started last year. On his resignation from the Bumi board following a dispute with the Bakries, one of Indonesia’s most powerful families, he said bringing them to London was a “matter of great regret.”

“Anything that he puts forward would have to be better or more concrete in terms of financing than the existing offer from the Bakries,” Richard Knights, a London-based analyst at Liberum Capital Ltd., said by phone today. “The board of Bumi Plc should assess any offer on its merits and I’m sure they’ll assess it as such.”

The group led by Rothschild, 41, isn’t planning a rival bid to the Bakrie family’s $947 million offer for Bumi’s 85 percent stake in PT Berau Coal Energy Tbk. (BRAU) The financier and his associates are seeking to maintain a U.K. listing and resolve corporate governance issues, the person said.

Bumi Statement

Bumi hasn’t received any proposal from Rothschild, the company said in a statement. The hiring of Morgan Stanley was earlier reported by Sky News.

The stock rose 14 percent in London trading, the biggest gain in three weeks, to close at 283 pence. Spokesmen for Rothschild, the Bakrie Group and Morgan Stanley declined to comment. Berau Coal Energy jumped 17 percent in Jakarta trading today, valuing the company at about $870 million.

The Bakries, who run a palm-oil-to-property empire that started in Sumatra in 1942, last month offered to buy all of the assets of London-listed Bumi in a bid to help resolve “irreconcilable differences” with Rothschild and his fellow founders. That would completely unwind the $3 billion deal struck by the financier and the Bakries in 2010 to create a London listing for the two Indonesian coal producers.

Probing ‘Irregularities’

The $1.2 billion proposal from the Bakries, described by Rothschild as not being in the interests of investors, came almost three weeks after Bumi Plc (BUMI) started a probe into potential financial “irregularities” at its Indonesian investments.

Bumi Plc supports a plan to exit its 29 percent stake in PT Bumi Resources (BUMI), Indonesia’s biggest coal producer, as it seeks to sever ties with the Bakries, two people familiar with the matter said last month.

Bumi Plc isn’t currently considering the Bakries proposal to buy within six months its stake in Berau Coal Energy, the people said. The London-traded company hasn’t ruled out accepting a more formal bid for Berau in the future, they said.

Bumi Plc said earlier today in a separate statement it had appointed Rothschild Group as its financial adviser, after saying Oct. 17 it had hired the bank to evaluate the Bakries’ proposal.

To contact the reporter on this story: Jesse Riseborough in London at jriseborough@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net


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