Bakries file for divorce from Nat Rothschild over Bumi
Indonesian family seeks to buy back coal mining assets from London-listed giant
The acrimonous relationship between the financier Nat Rothschild and Indonesia's powerful Bakrie family in the FTSE 250-listed miner Bumi looks to be heading for a split after the latter filed for divorce yesterday.
The Bakries want to buy back the Indonesian coal-mining assets they injected into the London-listed vehicle Mr Rothschild created two years ago, returning Bumi to its "original status" as a cash shell.
The news sent Bumi's shares soaring 40 per cent to 259p, with City analysts saying it could be a good chance for investors to exit the shares, which originally listed at £10 a piece.
"Valuation aside, this looks like good news for Bumi, as it could walk away with its reputation intact and some cash in the bank," analysts at Numis said.
Relations between Mr Rothschild and the Bakries deteriorated sharply after the financier called for a "radical cleaning-up" of corporate governance at their Indonesian-listed Bumi Resources last November – a move which prompted his removal from the co-chairman's seat in March, although he held on to his directorship.
Last month, tensions hit new heights when Bumi launched an investigation into Bumi Resources over allegations of "potential financial and other irregularities".
Bumi, whose board met in Singapore yesterday, said it would consider the offer with investors before deciding whether to recommend it.
The move would initially see the Bakries swap their 23.8 per cent stake in Bumi for a 10.3 per cent share of their Indonesian-listed company, Bumi Resources. They would then look to buy back the 18.9 per cent stake of Bumi Resources the London company would own by the end of 2012, and pay another $947m (£590m) for Bumi's 85 per cent stake in rival Indonesian coal-miner Berau before next June.
The plan was drawn up by Ian Hannam, the JP Morgan Cazenove mining deal maker who quit the blue-blooded bank this spring to challenge a fine for market abuse. He put together the original Bakrie-Bumi marriage in November 2010.
But the Bakries' proposal contains a sting in the tail for Mr Rothschild, calling on him to give back the shares he received as a bonus when he completed the deal that brought the Bakries in. These shares make up most of his 12 per cent stake in Bumi and are worth about £40m.
Mr Rothschild declined to comment on the call for him to return his bonus shares yesterday. But he said: "Even if the Bakries were to exit, one of the key concerns I share with other minority investors is that Bumi plc would still face a concentration of ownership by a small number of closely related parties and such challenges would remain."
He is understood to be referring to Samin Tan and Rosan Roselani, who own about 24 per cent and 13 per cent of Bumi respectively. Mr Tan, who is chairman of both Bumi and Bumi Resources, bought half of the Bakries' stake in Bumi last year for $1bn to help prop up other parts of their empire.
"We are disappointed because there are some absolutely fantastic assets in Indonesia," said one top-10 investor in Bumi. "This was a stock that was 150p before recent events – the current proposal, if the Bakries have the money to go through with it, would lead to potential return of just under £5 a share," he said. "From out point of view, that is disappointing, but it is not as catastrophic as it was."
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