12.10.2012--JAKARTA--Anger following a demand for an internal
investigation by London-listed Bumi Plc. into its Indonesian
subsidiaries has led to the Bakrie family calling an end to its
19-month business venture with Nathaniel Rothschild, heir to the
legendary banking family.
The Bakries, represented by PT Bakrie and Brothers (BNBR) and
Singapore-based Long Haul Holdings, have proposed revoking their
indirect stake in Bumi Plc. and taking back control over their
crown-jewel company, PT Bumi Resources (BUMI), the world’s largest
thermal coal exporter.
According to a statement published on Bumi Plc.’s website, the
proposed transaction is intended “to unwind the relationship”
between Bumi Plc. and the Bakrie Group interests and return
everything “as far as possible” to the position that existed before
the series of transactions that aligned them last year.
The statement emerged after a meeting between Rothschild and Indra
Bakrie in Singapore on Wednesday evening. The statement reveals
that BNBR and Long Haul propose to exchange their joint ownership
of 23.8 percent shares in Bumi Plc. for its 10.3 percent
shareholding in BUMI and to buy Bumi Plc.’s remaining 18.9 percent
shares in BUMI for approximately US$278.3 million in cash before
BNBR and Long Haul also made another offer to purchase Bumi Plc.’s
entire 84.7 percent holding in PT Berau Coal Energy (BRAU) with
completion by June 30, 2013. No price has been set for this
Bumi Plc. said it was considering the proposal and would make
recommendations to its shareholders.
According to a BNBR executive, a meeting is already scheduled with
potential lenders next week as the company plans to finance the
transaction partly through loans, probably involving Credit Suisse
and JP Morgan.
Trust Securities analyst Reza Priyambada said the fallout with the
London venture stemmed from concerns regarding corporate
governance. BUMI and BRAU, he said, had always filed their
financial reports, but inside information was what mattered. “Are
they telling the truth in the information submitted to the
Indonesia Stock Exchange? Did they really carry out the things they
said they did? We need to know those things,” he said.
Bumi Plc. has launched an internal investigation of the
subsidiaries for alleged financial irregularities pertinent to
assets estimated to be worth $500 million, which include an
investment in oil and gas exploration in Yemen. The Singapore
meeting was supposed to hear an update on the investigation from
London-based law firm Macfarlanes.
Reza said Bakrie’s split from Bumi Plc. could cause the company to
lose access to the European market.
“Being able to expand into Europe was the initial target, but ever
since the companies joined forces, they have been involved in
internal conflicts. They did not reach the target,” he said.
Capital market and financial analyst Lin Che Wei said Bumi Plc.’s
internal disputes, which involved the politically connected Bakrie
family, had a negative impact on Indonesia’s capital market
situation. The family’s patriarch, Aburizal Bakrie, is the Golkar
Party presidential candidate for the 2014 election.
“To foreigners, it would seem as though there is too much political
interference in Indonesia’s investments. The disputes have created
a bad image for Indonesian corporations in general as well,” he
said during a telephone interview.
Lin, however, credited the family for its ability to survive
life-threatening challenges in the past. “The Bakrie business
empire, is like a cat, it has nine lives. It just won’t die.“
After the split announcement, both BUMI and BRAU saw their share
prices grow. On Thursday, shares of BUMI and BRAU closed at Rp 720
(7.5 US cents) and Rp 200 apiece, respectively, a rise of 5.9
percent and 34.2 percent from the previous day...