Last updated: November 5, 2012 5:34 pm

Bumi receives approach from Rothschild

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Bumi has received a proposal from Nat Rothschild, the financier, that could provide the Indonesia-focused coal miner with an alternative to the $1.4bn plan by Indonesia’s influential Bakrie family to unwind the company after months of shareholder wrangling over corporate governance.

The London-listed company said in a statement on Monday that it had received a letter from Mr Rothschild’s NR Investments “proposing an alternative” to the Bakries’ suggestion that they buy back the Indonesian mining assets that they reversed into Mr Rothschild’s cash shell, Vallar, in 2011.

The Financial Times reported last week that Mr Rothschild was assembling a group of investors to buy the Bakrie family and their associates out of the company and that a number of Indonesian tycoons, including general-turned-politician Prabowo Subianto, had been asked to join the consortium.

Bumi has been beset by corporate governance concerns and worries about the Bakries’ debts. The shares have fallen nearly 80 per cent from a peak of £14, with the group coming to epitomise the risks investors face when dealing with emerging market resource groups, even if they come with the City’s stamp of approval via a London listing.

One person close to Bumi said the company received the letter from Mr Rothschild on Friday and that it amounted to a general “proposal” for shareholders rather than a takeover offer. “The big question is, ‘Who is he teaming up with to be the Indonesian champions?’ There were no names mentioned in his proposal.”

A spokesman for Mr Rothschild declined to comment. Shares in Bumi slipped by 4p to 279p on Monday.

Before it considers the offer from the Bakries, Bumi Plc’s board has said it will await the outcome of an investigation into potential financial irregularities at its Indonesian businesses, expected in the next two to three weeks.

One person familiar with the matter characterised Mr Rothschild’s proposal as early-stage but said a “serious offer” would also be considered at that time.

Mr Rothschild’s plan would see the departure of Samin Tan, Bumi’s chairman, who bought half the Bakries’ stake in Bumi late last year, and another associate of the family, Rosan Roeslani, a Bumi director.

Under the plan, Bumi would remain a London-listed company and would retain its 85 per cent stake in Indonesian subsidiary Berau Coal Energy.

But Mr Rothschild would support the company cutting ties with the Bakrie-controlled, Jakarta-listed entity PT Bumi Resources, in which it currently has a 29 per cent stake, according to a person familiar with the matter.

Bumi’s board plans first to consider the Bakries’ two-stage proposal to unwind the plc’s relationship with PT Bumi Resources. A $950m cash proposal to buy the group’s stake in Berau Coal is likely to be reviewed at a later date, amid doubts about whether the Bakrie family can raise financing for such an offer.

There remains support among Bumi Plc’s board for retaining the stake in Berau and rebuilding the company around it, people familiar with the matter have previously said.

In a separate statement, the company sought to distance itself from Bumi Resources by saying it was no longer appropriate for it to be treated as an “associate” company given the “level of influence over the management and conduct of Bumi Resources”.

A third-quarter production update issued by Bumi last week had already excluded output previously included in financial statements covering its stake in Bumi Resources.

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