Last updated: June 26, 2013 7:11 pm

Bumi deal to claw back $173m of queried payments

Bumi, the London-listed coal miner that has been hit by accounting irregularities and high-profile boardroom disputes, has reached agreement to secure the return of $173m in cash and assets through transfers arranged by former director Rosan Roeslani.

The announcement, which coincided with Bumi’s annual meeting in London on Wednesday, comes less than a month after the Indonesia-focused company revealed it had discovered payments totalling $201m had been made by its subsidiary Berau Coal during 2011 and 2012 that “had no clear business purpose”.

Under the terms of the deal both Bumi and Berau, which is 85 per cent owned by its London-listed parent, have agreed to waive any potential claims against Mr Roeslani in respect of the disputed payments.

Mr Roeslani is a former president director of Berau who was replaced in his role earlier this year. Mr Roeslani has made no admission of wrongdoing or liability in respect of the potential claims under the deal, which is subject to shareholder approval by Bumi and Berau.

Nat Rothschild, co-founder of Bumi who resigned from its board last October and then failed in his attempts to oust the majority of the board in February, was notable by his absence.

But his representative demanded to know whether the amount of monies secured under the deal with Mr Roeslani would be nearer to 50 or 100 per cent of queried payments.

Nick von Schirnding, chief executive, described the amount as “well north of 50 per cent” as he recapped on a year that had been a “miserable time for shareholders”.

Samin Tan, chairman, defended the deal with the former head of its subsidiary.

“You see in the audited accounts 2012 the total amount being reported as expenditures that had no clear business purposes at $201m, versus a settlement agreement which has been signed with Mr Roeslani for $173m, so there’s a difference of about $28m – so I guess that does make up the great majority of the balance,” he said.

“What is that $28m?,” he continued. “It was expenditure identified with no clear business purpose but took place before the acquisition of Berau by Vallar [the shell vehicle created and floated by Mr Rothschild that became Bumi].”

Mr von Schirnding said Bumi was continuing with its controversial unravelling of its cross-holding of interests with fellow Indonesian company PT Bumi Resources, controlled by the powerful Indonesian Bakries.

The deal would see Bumi separate from Bakrie Group, which in turn would exit its 23.8 per cent holding in Bumi and instead take Bumi’s 29.2 per cent stake in Jakarta-listed Bumi Resources.

Mr Rothschild had pledged his vote against the re-election of all but one board member at the annual meeting, arguing that negotiations on the deal to separate out Bumi’s interests with the Bakries’ had failed to protect minority shareholders.

However, Mr von Schirnding defended his own and other sitting board members’ efforts to rescue the company from a series of crises over the year.

“The situation I faced as CEO on the first of January this year was a company that had not had independent management in charge in 2011 or 2012, controls over its finances that were being flouted and with its major shareholders at war,” he told the meeting. “In short, we were faced with a mess at every level from the board down, from finance to operations.”

He added: “The prize is worth fighting for – Berau has a great future as an efficient independent coal producer on the doorstep of Asia’s biggest markets.”

Mr von Schirnding admitted after the meeting he had been surprised at the relatively subdued amount of questioning from the small number of shareholders present, while Mr Tan thanked retiring board members for their help “over the past year and a half in which I have lost a lot of money”.

However, Andrew Hickman, a shareholder and human rights campaigner who criticised Bumi for its treatment of communities in Indonesia, told the meeting: “Your company falls below the standards required and continues to do so. You still have missing funds, your shares are still suspended, and you still have an association with Indonesian partners with a record that is not to be admired.”

He added: “This company seriously needs to think about whether it merits continuing to exist.”

Shares in Bumi, which debuted at £10 in July 2010, closed at 259.3p ahead of their suspension in April.

Additional reporting by Duncan Robinson

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