Financier Nat Rothschild is assembling a group of investors to buy Indonesia’s influential Bakrie family and their associates out of coal miner Bumi Plc, in a fresh bid to resolve the shareholder conflict that has dogged the company for months.
Mr Rothschild and other minority shareholders in Bumi have approached a number of Indonesian tycoons to join the consortium, according to people familiar with the matter.
These include general-turned-businessman Prabowo Subianto, the former son-in-law of President Suharto, who has emerged as an early frontrunner in Indonesia’s 2014 presidential election.
A spokeswoman for the tycoon’s family confirmed Mr Rothschild, a scion of the legendary banking dynasty, had approached Gen. Subianto and several other “businesspeople and companies in Indonesia”. He also spoke to the former general’s brother, Hashim Djojohadikusumo, another prominent local businessman, people familiar with the matter said.
Mr Rothschild’s plan envisages replacing the Bakries and their associates with a new group of investors. It would also 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, who is a Bumi director.
“If you fix the people, you have a great future equity story,” said one person familiar with the proposal. “There are lots of other Indonesian investors who see the value western institutions bring to their businesses.”
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 it would exit 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.
The plan is essentially a counter-proposal to one made last month by the Bakries, who offered to buy Bumi’s operating assets in exchange for cash and the cancellation of the group’s 23.8 per cent stake in Bumi.
Shares in Bumi closed up 14 per cent at 283p on the London stock exchange on news of Mr Rothschild’s proposal.
However, there was scepticism that the buy-out would solve all Bumi’s problems. “If Mr Rothschild had corporate governance concerns about the Bakries, he may struggle to find other Indonesian tycoons with an unblemished record.” said one Jakarta-based investor.
Bumi was created when the Bakries’ coal-mining assets were reversed into Vallar, Mr Rothschild’s London-listed shell company. It was seen as a way for investors to gain exposure to a resource-rich emerging market while enjoying the high standards of corporate governance that come with a London listing.
But the company has been plagued by tensions between Mr Rothschild and the Bakries, and investor concerns about the family’s debts. In September, Bumi launched an internal investigation into alleged financial irregularities at PT Bumi Resources.
Mr Rothschild, who owns more than 10 per cent of Bumi and was its co-chairman until earlier this year, fell out with the Bakries last year and resigned from the Bumi board last month.
Bumi said it had not received any bid approach from Mr Rothschild. A person close to the company said it would not be making any strategic decisions until the investigation into PT Bumi Resources was completed.
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