By Alex MacDonald and Eric Bellman
LONDON--U.K.-listed Indonesian coal miner Bumi PLC (BUMI.LN)
said Wednesday its evaluating all its legal and commercial options
after receiving the near final version of an independent probe into
financial and other irregularities at is Indonesian assets.
It also said that Chief Executive Nalin Rathod will step down at
the end of the year but remain a board member. Mr. Rathod, who was
appointed Bumi's second CEO in March and has close ties to the
powerful Indonesian Barkie family, didn't provide a reason for
stepping down.
He will be suceeded by head of corporate affairs Nick von
Schirnding, a former senior executive at Anglo American PLC
(AAL.LN), who played a key role in the diversified miner's London
listing and was a close advisor to Bumi's two successive CEOs. Mr.
von Schirnding will join the board at the end of the year.
Bumi's shares have tumbled more than 80% from last year's high
after a boardroom rift over corporate governance erupted and an
independent probe was launched into financial irregularities at
Bumi's 29% owned Indonesian coal miner PT Bumi Resources TBk
(BUMI.JK), one of the jewels in the Bakrie family's Bakrie Group
conglomerate.
The fraught relations between the company and the powerful
Indonesian Bakrie family prompted Bakrie Group to offer an end to
relations with the company by buying back all of Bumi's coal assets
for $1.2 billion in cash and cancelling its 23.8% stake in Bumi.
The proposal, however, met strong opposition from a large group of
minority shareholders, led by major shareholder and co-founder
Nathaniel Rothschild. The minority shareholders group said it would
block the Bakrie Group offer in favor of their own proposal which
would remove not only the Bakrie family but two other large
shareholders, chairman Samin Tan and board director Rosan Roeslani,
who have close ties to the family.
Bumi said that the two shareholders, who hold their investments
through coking coal miner PT Borneo Lumbung Energi & Metal
(BORN.JK) and Bukit Mutiara respectively, have indicated to the
board that they had "no intention of selling on the terms of the"
proposal put forward by Mr. Rothschild's group of investors.
"The Independent Non-Executive Directors are continuing to work
through a number of very complex issues as quickly as possible with
a clear focus on maximizing shareholder value," Sir Julian
Horn-Smith, the company's independent executive director said.
Bumi, however, noted that it has been engaging with U.K. regulators
over the findings of the investigation and wouldn't be in a
position to recommend a course of action until regulatory processes
were sufficiently advanced.
Nevertheless, the company said the board "is working towards a
transaction which separates the Bakrie Group from the Company and
divests the company's minority interest in Bumi Resources as soon
as practical."
Bumi said that an independent probe launched by U.K. law firm
Macfarlanes LLP on Sept. 24 confirmed the Bakrie Group's view that
the information furnished for the investigation was obtained
illegally by email hacking, but it noted that "these matters do not
affect the seriousness with which the Board is treating the
allegations."
The board didn't disclose much about the findings of the
investigation, except to say that it didn't believe further
write-downs would be necessary given that Bumi had already written
down to zero its share of the $600 million in development assets at
Bumi Resources that are the main focus of the investigation.
Bumi did, however, say that it would take an impairment charge
at the end of the year related to the value of its 85% stake in PT
Berau Coal Energy TBk (BERAU.JK) due to a drop in thermal coal
prices.
It also said unequivocally that it had never planned nor would
plan to recommend the sale of Berau on the terms proposed by the
Bakrie Group.
The debt-laden Bakrie Group had proposed buying back the Berau
stake sometime next year for about $950 million as the third
transaction in its three-part exit plan, a move which Mr Rothschild
and minority shareholders want to block despite chairman Samin
Tan's willingness to accept the offer.
Mr. Rothschild and minority shareholders has proposed an
alternative deal which would allow Bumi to sell its 29% Bumi
Resources stake to the Bakrie Group in exchange for the Bakrie
family's exit from Bumi's shares plus $278 million in cash. That
sale would be interconditional on Mr. Tan and Mr. Roeslani agreeing
to exit their investments.
The Bakrie Group wasn't immediately available for comment when
contacted by Dow Jones.
Write to Alex MacDonald at alex.macdonald@dowjones.com
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