Bumi battle nears end with $501m deal

  • @MLeftly

The long-running saga of separating the battle-bruised miner Bumi from Indonesia’s powerful Bakrie family could finally be coming to an end after the parties announced a potentially decisive $501m (£330m) deal yesterday.

The Bakries have finally agreed in principle to buy back the London-listed coal miner’s 29.2 per cent stake in the similarly named Bumi Resources, bringing this venture entirely into the family’s hands.

In a convoluted ownership structure that has both confounded and angered the City, the two-stage deal also sees the Bakries’ large stake in the listed Bumi bought out by the chairman, Samin Tan.

But Nat Rothschild, the billionaire financier who co-founded Bumi in 2010 with the Bakries before spectacularly falling out with them, is furious at this deal as it leaves Mr Tan with nearly half of the company’s stock.

In response yesterday Mr Rothschild fumed: “For the sake of he London market, I hope the regulators step in and ensure the interests of independent shareholders are protected.”

Other investors will simply be pleased to see the situation with the Bakries resolved as Bumi’s board looks to nurse the company back to health.

Its shares were suspended  in April while an investigation found more than $200m of unexplained expenditure at a key business unit. The company yesterday confirmed that it faces being kicked out of the FTSE 250 and FTSE All-share indices if its shares have not resumed trading by Monday. Such a move would mean that Bumi would have to wait for a quarterly review to re-join the mid-cap index when its shares resume trading and could force tracker funds to sell the shares meanwhile.

In a move designed to placate exasperated shareholders, Bumi said yesterday that a “substantial proportion” of the $501m from the deal will be handed over to them. The senior non-executive director, Julian Horn-Smith, did warn, though, that “more needs to be done” on the finer details of the transactions before shareholders can vote on the plans.

He added: “Achieving a separation from the Bakrie family and Bumi Resources remains the clear priority of the company.”

The major remaining stumbling block is Mr Rothschild. Although he is no longer on the board, Mr Rothschild remains a significant shareholder and will try to vote down the deal.

If completed, Mr Tan’s stake will be beyond the threshold that would force him to make an offer for the whole company. This is not part of the outgoing chairman’s plans, though, so Mr Tan will seek a waiver from regulators.