February 7, 2013 12:23 am

ISS deals blow to Rothschild over Bumi

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In a setback for financier Nat Rothschild, Institutional Shareholder Services, the influential adviser on corporate governance matters, has recommended investors in Bumi Plc vote against his proposals to replace all the miner’s independent directors.

London-listed Bumi said last month it would hold an extraordinary meeting on February 21 to vote on Mr Rothschild’s proposal to replace 12 of the 14 Bumi directors.

ISS said shareholders should support the removal of the representative of Indonesia’s Bakrie family – Nalinkant Rathod – and the two representatives of Samin Tan, Bumi’s current chairman – Scott Merrillees and Alexander Ramlie – but vote against Mr Rothschild’s remaining proposals.

The shareholder advisory firm also said Mr Merrillees and Mr Ramlie “do not appear to offer a viewpoint different from Tan’s and may simply create a voting block rather than add additional value as deliberative directors”.

ISS said Mr Rothschild had “not made a compelling case” to replace the independent directors. It said its voting recommendations were designed to help the Bumi board achieve a negotiated separation from the Bakries, which was in shareholders’ best interests.

“A swift resolution with the Bakries appears less likely under the dissident’s board,” it added.

The advisory group added that all directors were up for re-election at the next annual general meeting of Bumi in June 2013, “when shareholders can re-evaluate their position”.

Mr Rothschild suffered another blow late last month when Steven Shapiro and Sir Graham Hearne, the two directors he planned to keep, said they did not support him and would resign if his proposal won the shareholder vote.

The ISS recommendation marks a victory for the Bumi board, which had also urged shareholders to reject Mr Rothschild’s proposals. Nick von Schirnding, chief executive of Bumi, told the Financial Times last month that only the current board could deliver the planned separation from the Bakrie family and their company Bumi Resources.

Mr Rothschild, who has an 18.2 per cent voting stake in Bumi, has proposed replacing the current board with a new team led by non-executive chairman Wallace King, a veteran of the Australian contract mining industry.

He also wants to see the relationship between Bumi and the Bakries ended and has made a counterproposal to raise fresh funds – in part from new Indonesian investors – to buy out other Indonesian shareholders, including the chairman Samin Tan.

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