By Jesse Riseborough - Jul 8, 2013 5:37 PM GMT+0700
Nathaniel Rothschild, the financier who co-founded Bumi Plc, asked the U.K.’s financial regulator to investigate whether the Indonesian coal producer made misleading statements about a proposed deal with the Bakrie Group.
Rothschild’s claim centers around Bumi’s delayed plan to unwind its 29 percent investment in PT Bumi Resources (BUMI) and separate from co-founders the Bakrie family in a cash-and-share deal, according to a copy of a July 4 letter sent by Rothschild’s lawyers to the Financial Conduct Authority and seen by Bloomberg News. A Bumi spokesman declined to comment.
Rothschild claims Bumi and the Bakrie Group “issued a series of choreographed announcements which created a misleading impression as to the terms of the separation,” the letter shows. They then “relied on the misleading characterization of the benefits” of the deal to influence shareholders to vote against resolutions put forward by Rothschild at a February extraordinary general meeting, it said.
Bumi has been at the center of a battle for control between co-founders Rothschild, 41, and the Bakries since the $3 billion deal that brought them together started to sour in late 2011. Waning coal prices, board infighting and probes in the U.K. and Indonesia have weighed on the stock, which plunged 69 percent in London last year. The shares have been suspended from trading since April.
A deal to separate from the Bakries announced in October, which results in the Bakries canceling their stake in London-listed Bumi and buying back their holding in PT Bumi, has yet to be completed. Bumi Chief Executive Officer Nick von Schirnding said last month the deal was still being worked on and he was “confident we are nearing the end of this process.”
Former Thai Prime Minister Thaksin Shinawatra is in talks to buy the Bakrie family’s 23.8 percent stake in Bumi, the Sunday Times reported yesterday, without saying where it got the information. A Bumi spokesman declined to comment on the report, which said Shinawatra had hired UBS AG to advise him.
The Bakries have the full amount of funds available to complete the deal and were waiting to hear from the board of Bumi on “how they wish to proceed,” according to a statement last month. A London-based spokesman for the Bakrie Group declined to comment today.
According to the letter to the U.K.’s FCA, Rothschild is concerned a $50 million payment from the Bakries held in escrow will be returned should they withdraw from the deal. In the week leading up to the February shareholder meeting, at which Rothschild sought to remove 12 of the 14 directors, the CEO and Chairman Samin Tan confirmed the terms of the Bakrie deal were fixed, according to the letter.
“The question therefore arises whether false or misleading statements have been made to the market,” Rothschild’s lawyers wrote, adding that their client invites the FCA to investigate.
The creation of Bumi brought together Rothschild and the Bakries, a family-owned palm oil-to-property empire founded in Sumatra in 1942. Bumi and the Bakries announced a deal to unwind their investment in October that involved the Bakries exchanging their 23.8 percent of Bumi Plc (BUMI) for 29.2 percent of Bumi Resources in a cash-and-share-swap deal, leaving Bumi Plc in control of Berau Coal.
Rothschild left the board of Bumi in October, saying he’d lost confidence in its ability and vowing to fight “from outside the tent.” He retains a stake of about 15 percent, according to data compiled by Bloomberg.
To contact the reporter on this story: Jesse Riseborough in London at email@example.com