Nat Rothschild set to block Bumi's $1.4bn buyout

http://www.guardian.co.uk/business/2012/nov/02/nat-rothschild-to-block-bumi-buyout

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Banking scion Nat Rothschild is forming a consortium to launch a counter-offer for Bumi, the mining firm he set up, in a bitter battle against the powerful Indonesian Bakrie family.

The struggle over Bumi, which was brought to the London Stock Exchange by Rothschild with the backing of one of Jakarta's most powerful families, including presidential candidate Aburizal Bakrie, has seen the two dynasties fall out spectacularly.

Rothschild is planning to team up with another Indonesian presidential candidate, Prabowo Subianto, among others, to thwart the Bakrie's $1.4bn (£867m) plans to buy out Bumi, according to Reuters.

The Bakries had planned to quit Bumi and dismantle the company by buying back the stakes the plc has in two coal mines – Bumi Resources and Berau Coal Energy.

News of a counter offer by Rothschild sent Bumi shares up 14% to 283p, however they are still a long way off their £10 flotation price.

The buyout plan by the Bakries involves swapping their Bumi Plc shares for part of the 29% stake in Bumi Resources held by the London-listed company, then buying the rest of the stake for cash, before acquiring Bumi Plc's 85% stake in Berau.

Buying out the 29% stake is seen as straightforward, but prising away from the London listed company its 85% stake for Berau – Indonesia's fourth largest coal mine – could prove more difficult.

Rothschild quit the board as a non-executive director after the Bakries made their offer to buy out the company, saying it would not be in the interests of shareholders to accept the deal. He said at the time: "It will be a disgrace to proceed with, or even to entertain the proposal."

He was forced out as co-chairman after writing to the Bakries demanding a clean up of the company's operations.

The resignation came soon after the London-listed company launched an investigation into "financial irregularities" at Bumi Resources in Indonesia, after a whistleblower in Jakarta sent documents relating, in part, to a £198m writedown the company made last year on a business owned by a member of the board.

Since Rothschild stood down, the mudslinging between him, the Bakries, and Bumi chief executive Samin Tan – a Bakrie ally – has continued.

Emails emerged last month revealing that Rothschild was told if he did not step down, Tan and senior non-executive director, Sir Julian Horn-Smith, would leave. Tan said Rothschild had been persistently disruptive, and had hinted he could send the businessman to jail suggesting he had been hacking Tan's emails.Rothschild denies all the allegations, calling them untrue and defamatory.

It is thought any deal Rothschild hopes to agree would see Bumi remain as a London-listed company with interests in Indonesian mining. Talks between several parties are ongoing with numerous businessmen being courted by Rothschild as he attempts to repair his reputation from the Bumi fallout.

In response to the rise in the share price Bumi issued a statement saying: "Bumi plc notes the movement in its share price following a number of articles in the media on a possible proposal from Nat Rothschild. Bumi plc confirms that it is not in receipt of any such proposal."

A spokesman for Rothschild declined to comment.