MAC: Mines and Communities

Bumi plc delays the vote on split with Bakries

Published by MAC on 2013-11-22
Source: Alliance News, Reuters, Telegraph, Jakarta Post (2013-11-21)

The Bumi soap opera continues (British regulator seeks to protect mining's minority shareholders).

The basic question now seems to be whether the money is there to finance this buy out deal.  On the surface it appears to be about Samin Tan's ability to stump up the money (as he did previously through Borneo Lumbung). 

So, it's business as usual: the bankers are still propping up this house of cards, the regulators are nowhere to be seen and the British politicians are too busy talking about 'creating jobs in the UK' to care about what's happening in Indonesia.

Bumi Separation Vote Delayed After Financing Plan Deadline Missed

Alliance News

21 November 2013

LONDON - Bumi PLC announced late Wednesday it is delaying a shareholder's vote on restructuring the company, after its chairman missed a key deadline to detail the financing arrangements for the deal.

The Indonesian thermal-coal miner said it had not received details of the financing agreements needed from a vehicle of Chairman Samin Tan, called RACL, which were a necessary pre-condition by November 20 in order to put the company's proposed separation from the Bakrie Group and BT Bumi Resources Tbk to a vote.

The company said it is now not in a position to proceed with the separation on the timetable previously indicated and has set a resolution to adjourn its general meeting on December 4 when the separation deal was expected to take place.

Tan wants to increase his stake in the company by buying out Indonesia?s Bakrie Group, one of Bumi?s founders, for USD223 million, but missed the deadline to show Bumi's directors that financing was in place to go ahead.

Bumi PLC said its independent directors continue to believe that the separation represents the most attractive path for the company and that the deal will deliver the disposal of its 29.2% interest in Bumi Resources at a 116% premium to the current market value of the interest, while providing Bumi PLC with USD501 million in cash.

The deal would leave Bumi PLC with control over Berau, an Indonesian thermal coal producer which is expected to produce 23 million tonnes of coal in 2013, while the Bakrie family would hold the Bakrie Group and BT Bumi Resources Tbk.

Problems have beset the two-step separation deal after founder Nat Rothschild recently warned that the original terms of the separation agreement had not been adhered to.

Rothschild, who created Bumi three years ago, noted recently that Rosan Roeslani, former Bumi PLC director and a person connected to Bakrie, still owes the company USD173 million. The amount was agreed following Bumi's allegations that Roeslani spent USD201 million in company funds with no clear business purpose.

"The board of Bumi has been aware of financial irregularities at both Bumi Resources and Berau for over a year, yet it has failed to take any meaningful action against those responsible," Rothschild said earlier this month.

Tan would hold a stake of more than 47% if the transaction goes ahead. He has previously said he intends to step down as chairman.

"The company understands that significant progress has been made by RACL in arranging its financing," Bumi said in a statement. "If this condition is satisfied the independent directors will consider sending a new circular to shareholders in order to seek their approval of the separation."

Bumi PLC shares were down 0.7% to 210.00 pence in early trading Thursday.


Miner Bumi delays vote on split after Tan misses deadline

Reuters

20 November 2013

Coal miner Bumi Plc (BUMIP.L) will postpone an investor vote on a planned split with Indonesia's Bakrie family that co-founded it, after the buyer of its stake failed to provide details of his financing arrangements by an agreed deadline.

Bumi said in a statement late on Wednesday that the buyer of the family's shares in London-listed Bumi - outgoing chairman and current Bakrie partner Samin Tan, who will hold 47.6 percent of the miner if the deal completes - had not met a November 20 deadline.

Tan had agreed to prove by Wednesday to Bumi's board that he has the finances in place - $223 million - to buy the family's shares. He has now been given until November 29.

Shareholders had been due to vote on the split with the Bakries on December 4. Bumi did not give a fresh date.

Bumi's management and its key Indonesian shareholders have been hammering out the details of a separation for months. Bumi said in a statement that it understood Tan had made "significant progress" in arranging the necessary funds.

But his failure to detail the arrangements by the agreed date is likely to raise fresh questions over financing troubles which could still undermine Bumi's split with the Bakries - a key move the company says will pave the way for a long-awaited overhaul and effort to refocus on its Berau coal asset.

Bumi said its independent directors "continue to believe that the separation represents the most attractive path forward available to the company", adding shareholder feedback since documents were published had confirmed support.

Not all responses have been positive, though, and shareholder advisory group PIRC on Tuesday said it recommended investors oppose the split, despite its attractions.

"There are clear merits of separating from the Bakrie group and the proposed return of cash will help to make the deal more appealing," PIRC said in its note to shareholders.

But it said shareholders were being asked to approve a deal "with many uncertainties".

Bumi was created in 2010 to bring Indonesian mining assets to London investors, but has struggled with feuding shareholders since its creation: the Bakries' relationship with their co-founder, financier Nat Rothschild, soured within months.

The split, if approved by investors, will see the Bakries sell their stake to Tan. The Bakries will then buy back London-listed Bumi's 29.2 percent stake in troubled Jakarta-listed unit PT Bumi (BUMI.JK) for $501 million, above the market price.

At least $400 million of that is due to be distributed to shareholders, Bumi has said.

(Reporting by Clara Ferreira-Marques; editing by David Evans)


Financial Conduct Authority investigates Bumi founders

By Alistair Osborne, Business Editor

Telegraph (UK)

FCA probe disclosed in Bumi's circular to shareholders for its planned $501m split from Indonesia's Bakrie family

8 November 2013

The Financial Conduct Authority has begun an investigation into more than $400m (£250m) of related-party transactions involving the founder shareholders of Bumi, the scandal-ridden coal miner.

The regulator is thought to be examining payments outlined in Bumi's 2012 annual report, as well as "transactions... where the ultimate counterparty or beneficiary is not clear".

The FCA's probe was disclosed in Bumi's circular to shareholders on Friday for its planned $501m split from Indonesia's Bakrie family.

The circular said the FCA had appointed investigators on Tuesday "to investigate whether there may have been breaches of the listing rules and the disclosure rules in connection with certain related-party transactions set out in the 2012 annual report".

Nick von Schirnding, Bumi chief executive, declined to comment on the FCA inquiry but admitted he had decided to push ahead with the planned split from the Bakries despite having no guarantees that the money will arrive.

Bumi also conceded it had so far failed to recover any of the $173m missing from Bumi's 85pc-owned subsidiary Berau Coal that its former chief executive Rosan Roeslani undertook to repay under an agreement signed in June.

He has since failed to meet a September deadline for the repayment of an initial $30m. Bumi said it was now "commencing arbitration proceedings" in Singapore against Mr Roeslani and is known to have looked at ways of freezing his European assets, including his Inter Milan stake.

Bumi has called a shareholder meeting for December 4 to approve the split from the Bakries. A complex deal will see Bumi paid $501m, the Bakries take back Bumi's 29.2pc stake in Indonesian miner Bumi Resources and the sale of the Bakries' 23.8pc holding in Bumi to current chairman Samin Tan. He will emerge with a 47.6pc stake.

Bumi has given Mr Tan and the Bakries until November 20 to come up with the money or lose $50m held in an escrow account. The last date for the transaction's completion is December 17.

Bumi, which plans to change its name to Asia Resource Minerals, intends to return at least $400m to shareholders.

The shares, listed at £10 in 2010, rose 10 to 234.25p.


Bakrie's exit looms as Bumi plc heads for meeting

Raras Cahyafitri

The Jakarta Post

9 November 2013

Jakarta - The battle for control of the country's largest coal producer PT Bumi Resources took a few steps forward after its biggest shareholder London listed Bumi plc announced on Friday that a meeting would be held next month to vote on the planned buyback of the coal miner by the influential Bakrie family.

Bumi plc, which currently holds a 29.2 percent stake in Bumi Resources, will hold the awaited shareholder meeting on Dec. 4, when shareholders can vote on whether they approve a takeover proposal submitted by Bakrie Group. A circular outlining package of Bakrie Group's separation proposal has been delivered.

"We are pleased to present this comprehensive package to the shareholders, which, if approved, will isolate the company from the influence of the Bakrie Group and put the company in a strong position moving forward," Julian Horn-Smith, senior independent director of Bumi plc and chairman of the independent committee of the board, said in a written statement.

Bakrie Group, which is comprised of Jakarta listed PT Bakrie & Brothers and its related entity Long Haul Holdings Limited, holds a 23.8 percent stake in Bumi plc. Under its proposal, Bakrie Group is planning to purchase Bumi plc's stake in Bumi Resources for US$501 million.

Along with the planned purchase, Bakrie Group will also sell its 23.8 percent stake in Bumi plc to Ravenwood Pte. Ltd., which is controlled by Indonesian tycoon Samin Tan, for $223 million. Currently, Samin Tan has control in Bumi plc through its coking coal company PT Borneo Lumbung Energi & Metal, which holds a 23.8 percent share in the London company. Should the plan go ahead, Samin's Borneo and Ravenwood would together control 47.6 percent of Bumi plc.

Bakrie Group's takeover plan and stake selling to Ravenwood would depend on each other.

"The separation includes these two key interlinked elements because the company [Bumi plc] understands that the Bakrie Group's funding for the acquisition of the 29.2 percent interest in Bumi Resources relies on the sale of its entire indirect interest in the company to RACL [Ravenwood's entity conducting the purchase]," Bumi plc said in its circular to shareholders.

Given its planned purchase of Bumi Resources and planned sale of its stake in Bumi plc, Bakrie Group will officially exit its London journey, which was started in 2010 when it struck a deal with British financier Nathaniel Rothschild to develop coal mining group together. The Bakries and Rothschild's relations have soured following governance issue, which has led to the separation proposal.

Speaking in London, Bumi plc chief executive officer Nick von Schirnding said that his company had no assurance whether the Bakrie Group could support the transaction.

"Obviously it would've been our clear preference to have the monies in escrow, but clearly these are challenging times for the acquirers of the stake and these are challenging times for the coal business. We have not had proof of funding. We have no visibility on any of their funding," von Schirnding said as quoted by Bloomberg.

Commenting to the funding availability, Bakrie Group senior vice president Chris Fong said that the $278 million needed to buy back Bumi Resources has been in place since January 2013.

Bumi plc is also proposing to change its name into Asia Resource Minerals plc.

Apart from the separation plan, Bumi plc also said that it has commenced arbitration proceedings against Rosan Roeslani, the former president director of PT Berau Coal Energy, in which the London company owns an 84.7 percent stake.

The legal move, according to Bumi plc, is taken after Rosan failed to meet to transfer or procure the initial transfer amounting to $30 million, which is part of the agreed cash and assets worth $173 million to be transferred to Berau, before Sept. 26. Bumi plc recently secured commitment from Rosan that he would transfer a total of $173 million to compensate missing funds during his leadership in Berau.

Rosan couldn't be reached for comment on Friday.

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