Bumi plc reaches deal on terms of split from Bakrie family

published 13 February 2013

Bumi plc has signed an agreement that will allow Indonesia's Bakrie Group to divest its interest in the coal miner.

Bakrie will cancel its indirect 23.8% stake in exchange for Bumi plc's 10.3% holding in Asia's biggest thermal coal exporter PT Bumi Resources.

Bumi Plc will also sell the remaining 18.9% interest it holds in Bumi Resources to the Bakrie Group for $278m.

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The deal is a breakthrough for Bumi plc in its efforts to separate itself from the Bakrie Group and Bumi Resources in the wake of shareholder rifts.

The Bakries joined forces with financier Nat Rothschild in 2010 to form Bumi plc. The Indonesian coal assets from the Bakries were merged with Rothchild's investment vehicle, Vallar, and renamed Bumi plc.

Since then, company infighting, falling coal prices and an investigation into financial wrongdoing has seen Rothschild step down from the board and the Bakries

announce plans to unwind their interests in the company and take back the assets they invested.

In the latest spat, Bumi plc has reacted to Rothchild's proposal to remove at least 12 of the company's 14 directors and bring in a new board.

The group accused Rothchild of misleading shareholders in his bid to take back control of the company's board.

Shareholders will vote on Rothschild's proposals at a meeting in London on February 21st. Bumi plc has advised shareholders against the plan.

Shares in Bumi plc were up 9.16% to 441.00p at 15:22 Wednesday.

Rothschild reacted to the recent news, saying: "If Bakrie is really exiting Bumi plc why do they care who they sell to? A $50m deposit is equivalent to 13p per plc share. Since we launched our [extraordinary general meeting (EGM)] the stock has risen from 265p to 404p, and this is not because of the current boards' efforts - the Bakrie separation was already announced before we called our EGM."

Meanwhile, St James's Master Fund has bought 6.0m shares in Bumi plc for £24m as the mining group posted 30% growth in sales and 15% rise in output for the last three months of 2012 at its 85%-owned Indonesian business PT Berau Coal Energy.

JP Morgan has retained its 'underweight' rating "until clarity emerges on the Bakrie Group/PT Bumi Resources separation".

"While [the fourth quarter] came in better than feared, profitability remains under pressure; our forecasts suggest PT Berau was only roughly breaking even at the net profit level in [the second half of 2012], with negative [free cash flow] of circa -$130m after interest," the broker said Tuesday.