LONDON--The Indonesian coal mining company Bumi PLC (VLLRF,
BUMI.LN) is considering an alternative $508 million all-cash deal
to separate itself from its major shareholder and co-founder, the
Bakrie Group, according to people familiar with the matter.
Bumi Chairman Samin Tan is in talks to buy the Bakrie Group's
23.8% Bumi stake for about $230 million, one of the people familiar
with the matter said. The Bakrie Group would then combine the
proceeds with additional funds to buy Bumi's 29.2% stake in
Indonesia's largest coal mining company, PT Bumi Resources TBk
(BUMI.JK), for $508 million in cash.
Bumi and the Bakrie Group declined to comment on the alternative
proposal. Attempts to contact Mr. Tan were unsucessful.
The two-step deal would satisfy the goal of severing ties
between the Bakrie Group and Bumi while giving Bumi shareholders
cash in hand rather than a mix of cash and Bumi shares, as
previously outlined in a preliminary proposal last year. One of the
people familiar with the matter said that under the alternative
proposal, Bumi will likely return the proceeds from the Bumi
Resources stake sale to its shareholders via a special
dividend.
The Bakrie Group has been seeking to separate itself from the
troubled mining company since October following repeated boardroom
rifts over corporate-governance issues and the launch of an
independent probe into financial irregularities at Bumi's
Indonesian assets. This, alongside weakening coal prices, has
caused Bumi's share price to plummet nearly 75% since its initial
listing as Vallar in 2010.
Bumi and the Bakrie Group signed a preliminary agreement in
February to separate themselves from each other. As part of that
deal, the Indonesian conglomerate controlled by the influential
Bakrie family agreed to buy an 18.9% stake in Bumi Resources from
Bumi for $278 million in cash. In a second transaction, the Bakrie
Group said it would buy Bumi's 10.3% stake in Bumi Resources in
exchange for the cancellation of the Bakrie Group's Bumi
shares.
Under the alternative proposal, however, the Bakrie Group is now
considering selling its 23.8% Bumi stake to Mr. Tan for cash rather
than giving the shares directly to Bumi for cancellation.
In order for the deal to go ahead, Bumi shareholders would have
to vote in favor of an exemption that would allow Mr. Tan to double
his holding in Bumi without triggering a a requirement to make a
full takeover offer for the London-listed mining company. The U.K.
Takeover Panel must also agree to the exemption, one of the two
people familiar with the matter said.
The alternative proposal was first reported by Bloomberg
News.
Nathaniel Rothschild, a major shareholder and co-founder of
Bumi, said the alternative proposal "is Samin Tan's side deal:
taking control without paying a premium, and denying minority
shareholders the potential upside that all would have enjoyed
equally from buying back the stake."
Mr. Rothschild called on U.K. regulators and Bumi's board to
protect against such behavior and once again called for Mr. Tan to
step down immediately as chairman given his conflict of
interest.
Mr. Tan has previously said that he would step down as chairman
once the deal with Bakrie Group is done and a new independent
chairman has been selected. He also told reporters at Bumi's annual
general meeting last month that there was no side deal between him
and the Bakrie Group.
Mr. Tan, through Borneo Lumbung Energi & Metal (BORN.JK),
acquired a 23.8% Bumi stake from the debt-laden Bakrie Group for $1
billion in January of last year. Mr. Tan said he has lost about
$800 million as a result of that investment.
Bumi Chief Executive Nick Von Schirnding recently said at the
company's annual general meeting that he was confident that Bumi
was close to completing the final details of its separation
agreement with the Bakrie Group. Aside from completing the deal,
Bumi is also in dialogue with the Financial Conduct Authority to
test its financial control systems in order to allow its shares to
start trading.
Trading in Bumi's shares was suspended in April after the
company discovered expenses at its 85%-owned PT Berau Coal Energy
TBk (BRAU.JK) that had no clear business purpose.
-Write to Alex MacDonald at alex.macdonald@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires