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Nat Rothschild suffers blow in bid to seize back Bumi control Nat Rothschild suffers blow in bid to seize back Bumi control
(about 3 hours later)
Nat Rothschild's bid to seize back control of the embattled mining group Bumi has been dealt a blow after a key investor sold his shareholding just days ahead of a crucial vote on the company's future. Nat Rothschild's bid to seize back control of the embattled mining group Bumi has been dealt a blow after a key investor sold his shareholding shortly before a crucial vote on the company's future.
The scion of the Rothschild banking dynasty had expressed confidence that he will prevail at an extraordinary general meeting on Thursday, when he will seek to install a new board at the Indonesian coal-mining concern. The scion of the Rothschild banking dynasty had expressed confidence that he would prevail at an extraordinary general meeting on Thursday, when he will seek to install a new board at the Indonesian coal-mining concern.
The Bumi story was supposed to be a lucrative combination of two worlds, merging the coal assets of Indonesia's Bakrie family with Rothschild's money and roster of blue-chip City investors.The Bumi story was supposed to be a lucrative combination of two worlds, merging the coal assets of Indonesia's Bakrie family with Rothschild's money and roster of blue-chip City investors.
Instead, the one-time partners in the business are locked in a zero-sum battle for control of the business that comes to a head this week. Rothschild claimed at the weekend that his camp will "win by a convincing margin", allowing the financier to pursue litigation against the Bakries over allegations that $1bn (£645m) has gone missing from the mining assets. The Bakries have denied involvement in any financial irregularities. Instead, the former partners in the business are locked in a battle for control that should be settled this week. Rothschild claimed at the weekend that his camp would "win by a convincing margin", allowing the financier to pursue litigation against the Bakries over allegations that $1bn (£645m) has gone missing from the group's assets. The Bakries have denied involvement in financial irregularities.
However, the result of the shareholder poll has been thrown into doubt by an ally of the Bakries, Rosan Roeslani, agreeing to sell his 10% stake to two funds and a company controlled by a high-profile Indonesian family. However, the result of the shareholder poll was thrown into doubt when an ally of the Bakries, Rosan Roeslani, agreed to sell his 10% stake to two funds and a company controlled by a high-profile Indonesian family.
Before that move, the UK Takeover Panel had deemed Roeslani to be acting in concert with the Bakries and another Indonesian investor, Samin Tan, in a ruling that restricted the group's voting power to 29.9% of a shareholder ballot even though they controlled about 57% of the equity. That enhanced the power of Rothschild's 18% stake in any poll, which was further boosted by the support of UK shareholders including Schroders and Brompton Asset Management. Before that move, the UK's Takeover Panel had deemed Roeslani to be acting in concert with the Bakries and another Indonesian investor, Samin Tan, in a ruling that restricted the group's voting power to 29.9% of a shareholder ballot even though they controlled about 57% of the equity. That enhanced the power of Rothschild's 18% stake, which was further boosted by the support of UK shareholders including Schroders and Brompton Asset Management.
Monday's events undermined Rothschild's arithmetic by freeing up the Roeslani stake to be voted as the new owners wish. The Takeover Panel surprised the financier by declaring that the three buyers – Flaming Luck Investments which is owned by the Tanoesoedibjo family, Avenue Asia Capital Management and Argyle Street Management – are not considered to be acting with the Bakries. Reports stated that the Indonesian media company MNC Group, owned by Hary Tanoesoedibjo, is a leading contender in the bid for a majority interest in the Bakrie media company PT Visi Media Asia. In turn, that sale is intended to fund the Bakrie family's plan to buy back Bumi coal assets and exit the venture. Monday's events, the Roeslani stake may be voted as the new owners wish. The Takeover Panel surprised the financier by declaring that the three buyers – Flaming Luck Investments, which is owned by the Tanoesoedibjo family, Avenue Asia Capital Management and Argyle Street Management – are not considered to be acting with the Bakries.
One source familiar with the takeover battle for the London-listed business told Reuters: "It's not a slam dunk. It appears to be all wide open again." One fund manager said the row carried unhappy parallels with the Guinness share trading scandal in the 1980s, which damaged the City's reputation as a listing destination. "This is a test case for London," said the fund manager at one of Bumi's 10 largest institutional investors. "If being listed here is going to mean anything, the regulator has to step up to the plate and enforce the rules to make sure the accounts are trustworthy, the roles of directors are upheld and the rights of minority shareholders are better protected." Reports stated that the Indonesian media company MNC Group, owned by Hary Tanoesoedibjo, is a leading contender in the bid for a majority interest in the Bakries' media company PT Visi Media Asia. In turn, that sale is intended to fund the Bakrie family's plan to buy back Bumi coal assets and exit the venture.
In an ironic twist for Bumi's co-founder, the company's board is opposed to the 41-year old's proposal and is being advised by the Rothschild Group, the investment bank that is under the French branch of the family's influence. The board, which features City grandees Lord Renwick and Sir Julian Horn-Smith, are backing a divorce with the Bakries that would see the family buy back their mines, leaving the listed company with an interest in Berau, another Indonesian mining venture. The board argues that Rothschild risks miring the business in lawsuits if he pursues litigation against the Bakries under the auspices of a new board. One source familiar with the takeover battle for the London-listed business told Reuters: "It appears to be wide open."
A spokesman for Rothschild declined to give an immediate response on the latest development surrounding the control of Bumi. One fund manager said the row carried unhappy parallels with the Guinness share-trading scandal in the 1980s, which damaged the City's reputation as a listing destination.
Chris Fong, a senior vice president with the Bakrie Group, described Rothschild's plans as "ill-thought out proposals" which could provoke legal and regulatory chaos by triggering countersuits from Bumi's Indonesian shareholding bloc who control the majority of the equity. Following drops in coal prices and the disputes between shareholders, the share price in the firm have been trading at about one third of the 2011 listing price. However, Bumi's London-lsited shares rose 4.4% on news of the deal yesterday [Monday]. "This is a test case for London," said the fund manager at one of Bumi's 10 largest institutional investors. "If being listed here is going to mean anything, the regulator has to … enforce the rules to make sure the accounts are trustworthy, the roles of directors are upheld and the rights of minority shareholders are better protected."
In an ironic twist for Bumi's co-founder, the company's board is being advised by the Rothschild Group, the investment bank that is under the influence of the French branch of the 41-year-old's family.
The board, which features City grandees Lord Renwick and Sir Julian Horn-Smith, is backing a divorce with the Bakries that would see the family buy back their mines, leaving the listed company with an interest in Berau, another Indonesian mining venture.
The board argues that Rothschild risks miring the business in lawsuits if he pursues litigation against the Bakries.
A spokesman for Rothschild declined to give an immediate response to the latest developments surrounding the control of Bumi.
Chris Fong, a senior vice-president with the Bakrie Group, described Rothschild's plans as "ill-thought-out proposals" that could provoke legal and regulatory chaos by provoking countersuits from Bumi's Indonesian shareholding bloc, which controls the majority of the group's equity.
Following drops in coal prices and the disputes between shareholders, the group's shares have been trading at about one-third of the 2011 listing price.
However, it rose 4.4% on news of the deal on Monday.