Bloomberg News

Rothschild’s Failed Bumi Bid Sets Stage for Split From Bakries

February 21, 2013

Bumi Co-Founder Nathaniel Rothschild

Bumi Plc co-founder Nathaniel Rothschild, 41, has been locked in a battle for control of Bumi with Indonesia’s Bakrie family, with whom he founded the company in 2010 in a $3 billion deal that bundled Indonesian coal assets. Photographer: Simon Dawson/Bloomberg

Nathaniel Rothschild lost his bid to replace the chairman and chief executive officer of Bumi Plc (BUMI), helping clear the way for it to sell a stake in an Indonesian coal business being probed for alleged financial irregularities.

Rothschild, scion of a centuries-old banking dynasty who sought backing to oust directors he said failed investors, had his proposals rejected by shareholders at a meeting today. The 41-year-old financier has been locked in a battle with the Indonesian Bakrie family over the control of Bumi after co- founding the venture with them in a $3 billion deal in 2010.

Bumi will seek shareholders’ approval to separate from the Bakries as soon as possible and restructure its board with a “sense of urgency,” it said in a statement after the vote against removing Chairman Samin Tan and CEO Nick Von Schirnding.

While 19 of 22 proposals were rejected at the meeting, the stockholders supported Rothschild’s goal of replacing two directors, including Bakrie representative Nathin Rathod.

Bumi plunged 69 percent in London last year amid boardroom infighting and financial probes in the U.K. and Indonesia. While Rothschild and Bumi both sought to unwind collaboration with the Bakries, Bumi said it could only be done with the current board.

The Bakries have proposed exchanging their 23.8 percent of Bumi for 10.3 percent of Indonesian unit PT Bumi Resources. That plan would also see Bumi Plc sell the remaining 18.9 percent of its Bumi Resources stake for $278 million to the family.

Good Chance

One of Rothschild’s proposed board members, Richard Gozney, was supported by shareholders and the financier’s proposal to remove Jean-Marc Mizrahi was also backed by investors.

Rothschild said before the meeting that, while there was a “very good chance we’ll get some representation,” he would maintain pressure on the board should he lose, and “wait and see” whether to support the separation proposal.

Liberum Capital Ltd. said that a rejection of Rothchild’s plan to oust most directors would make it easier to split Bumi Plc from Bumi Resources, helping to boost the share price.

“It definitely helps the split because the Bakries have said they are supportive of the board’s proposal,” Richard Knights, an analyst at Liberum Capital, said in London. “Now the board can work with the Bakries on separating from Bumi Resources and both parties can move forward.”

To contact the reporter on this story: Thomas Biesheuvel in London at tbiesheuvel@bloomberg.net

To contact the editor responsible for this story: Amanda Jordan at ajordan11@bloomberg.net


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