Bloomberg News

Tan, Bakries to Fight for Bumi as Rothschild Boosts Stake

January 14, 2013

Bumi Plc Chairman Samin Tan and the Bakrie Group, the largest shareholders of the Indonesian coal venture, stepped up plans to fight a proposal by founder Nathaniel Rothschild to return to the board.

Tan has enough support to stop Rothschild’s bid, announced last week, to remove him and 11 of the 14 other board members, he said in an interview in Jakarta yesterday. Rothschild has acquired more stock to increase his stake ahead of next month’s shareholder vote, he said yesterday.

The Bakries said in a separate statement they have the right to nominate Bumi’s chairman, chief executive officer and chief financial officer under the terms of the original $3 billion deal with Rothschild that created Bumi. They also threatened to withdraw support for a plan to exit their investment in the group.

The battle for control of the $1.2 billion London-listed group intensified last week when Bumi agreed to hold a February shareholder meeting to vote on Rothschild’s motion to oust directors including Tan and CEO Nick von Schirnding. Rothschild is seeking to take control of the company after boardroom infighting and financial probes prompted moves by both groups to unwind their collaboration.

“We are talking to the key shareholders about supporting our program, our initiative and our strategy,” Tan said. “I truly believe we have enough support to stop Nat from reshuffling the board.”

Increased Stake

The scion of a centuries-old banking dynasty, Rothschild yesterday said he increased his share of the voting rights to 14.8 percent, or 18.2 percent of the votes for next month’s meeting. Bumi’s board has failed minority shareholders, he said last week.

He has proposed to nominate former Leighton Holdings Ltd. (LEI) head Wallace King as chairman, Brock Gill as CEO and himself as an executive director. He refuted a claim by the Bakries that they have the right to nominate senior appointments including the CEO, CFO and chairman.

“The Bakries’ threat to remain in occupation of the Bumi Plc register if they do not get their way is juvenile in the extreme,” Rothschild said in a statement. “Threatening minority shareholders is not the right way to win their support.”

All Means

The Bakries “will challenge using all legal means, any attempt not to honor the terms of this agreement which was the basis upon which” they agreed to the deal that created Bumi Plc (BUMI), according to the statement.

Bumi Plc was founded by Rothschild and the Bakries -- a family owned empire with investments in palm oil to property -- in a deal that grouped stakes in two Indonesian coal producers. Bumi’s assets include a 29 percent stake in PT Bumi Resources and an 85 percent holding in PT Berau Coal Energy.

Bumi Plc last month rejected a five-step plan from Rothschild regarding its coal assets. Rothschild made his proposal after the Bakrie Group in October offered $1.2 billion to buy all of Bumi’s producing assets.

The coal company is instead proposing a $430 million plan that would see it sever ties with the Bakrie family and exit its investment in Bumi Resources. (BUMI)

Tan has no intention “to stay any day longer” than needed and the board has agreed for him to remain until at least “this critical period is over,” he said. He will wait until “all the noises are gone” before leaving his position, Tan said, without giving a time frame.

Tan-Bakrie Venture

PT Borneo Lumbung Energi & Metal, one of Bumi Plc’s majority shareholders and controlled by Tan, said Dec. 18 that it rejected a proposal from Rothschild to sell its stake in Bumi Plc and isn’t in any talks with the financier or his advisers regarding the proposal.

Tan said in November that Borneo Lumbung Energi & Metal and the Bakries were close to an agreement to end their joint venture that holds shares in Bumi Plc, freeing the Bakries to trade their stake in the coal company and exit.

“It is well under way,” Tan said yesterday referring to the separation deal. “We need to reassess the implication of the extraordinary general meeting in this possible transaction.”

Bumi dropped 0.2 percent to close at 314.5 pence in London yesterday. The stock has fallen 63 percent in the past 12 months. Jakarta-listed PT Bumi advanced 3.1 percent to close at 670 rupiah.

To contact the reporters on this story: Harry Suhartono in Jakarta at hsuhartono@bloomberg.net; Jesse Riseborough in London at jriseborough@bloomberg.net

To contact the editors responsible for this story: Andrew Hobbs at ahobbs4@bloomberg.net; John Viljoen at jviljoen@bloomberg.net


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