Shares in Indonesia-focused mining giant Bumi leapt after major shareholder, the Bakrie Group, tabled an offer that could end their turbulent relationship.
Bakrie wants to swap its stake in the group for a stake of equivalent value in Bumi Resources.
The proposals could bring the curtain down on the fractious relations between the Bakries, one of Indonesia's wealthiest and most influential families, and another of the Bumi's original backers, financier Nat Rothschild.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The hope of a deal revitalised brow-beaten investors, who pushed shares up 29% in morning trading on Thursday.
Bakrie Group said the proposed transaction was intended to unwind the relationship between Bumi and itself.
This would return Bumi and its shareholders, as far as is possible, to the position that existed before a series of deals aligned them in 2011, it said.
The offer would also deliver significant cash resources to Bumi and its shareholders, it added.
"This is an obvious win-win solution for all shareholders in the present environment." said Bakrie family spokesperson Christopher Fong.
The Bakrie Group indirectly controls 23.8% in the London-listed group, and has proposed that this be cancelled.
In exchange it would receive a 10.3% stake in Bumi Resources, Bumi's Indonesia-listed affiliate, which is under investigation for alleged financial irregularities.
In addition, Bakrie has made a conditional proposal to buy back Bumi's remaining 18.9% shareholding in Bumi Resources for cash before Christmas 2012.
The Bumi board is considering both proposals.
On top of this Bakrie has made a further conditional proposal to make a cash offer within the next six months for Bumi's shareholding in Berau Coal Energy.
This shareholding makes up around 84.7% of the issued share capital of the fifth largest coal producer in Indonesia.
Shares in Bumi had lost three-quarters of their value over the last year on concerns over corporate governance, not to mention the extensive debts the Bakrie family have run up.
Bumi revealed on September 24th that it had begun investigating "potential financial and other irregularities" relating to Bumi Resources.
The FTSE 250 company was brought to the UK market by means of a so-called 'cash shell', then called Vallar, in 2011 by Nat Rothschild. At their peak, the shares were worth 934p each.
The collapse in the share price has reportedly incensed Samin Tan, the business tycoon who rescued the Bakrie Group when he invested $1bn in Bumi in return for a 47.6% stake split evenly between Tan and the Bakries.
The whole saga has played out like an episode of eighties glossy soap-opera Dallas; the latest proposals look like the first step in an attempt to bring the episode to an end.
JH/MM
-
Adidas, Nike or Jordans - could collectable trainers make you rich?The right pair of trainers can fetch six figures. Here's how you can start collecting vintage Adidas, Nike or Jordans now
-
Early bird ISA investors flock to global funds, India and the USThere’s been an increase in investors maxing out their ISA at the start of the new tax year. But where are they putting their cash and why does it make sense to be an early bird investor?
