JAKARTA. Bumi Plc said it will seek to separate itself as soon as possible from Indonesia’s Bakrie family after shareholders rejected a bid by co-founder Nathaniel Rothschild to oust its chief executive officer and chairman.
Rothschild, scion of a centuries-old banking dynasty who sought backing to remove directors who he said failed investors, had his proposal rebuffed by shareholders at a London meeting yesterday. The 41-year-old financier has been locked in a battle with the Bakrie family over control of Bumi after creating the coal venture with them in a $3 billion deal in 2010.
Bumi will now seek investors’ approval to separate from the Bakries and Indonesian unit PT Bumi Resources, which is under investigation for alleged financial irregularities. The Bakries have already proposed a swap of shares in Bumi Plc for stock in the unit, in a plan that would also see Bumi sell the remaining part of its Bumi Resources stake to the family.
“Now the board can work with the Bakries on separating from Bumi Resources and both parties can move forward,” Richard Knights, an analyst at Liberum Capital Ltd., said in London as reported by Bloomberg on Friday. Yesterday’s vote “definitely helps the split because the Bakries have said they are supportive of the board’s proposal.”
While 19 of 22 resolutions were rejected at the meeting, including the removal of Chairman Samin Tan and CEO Nick von Schirnding, investors supported Rothschild’s proposal to oust two directors, including Bakrie representative Nalinkant Rathod.
One of Rothschild’s proposed board members, Richard Gozney, was backed by shareholders and the financier’s bid to remove Jean-Marc Mizrahi was also supported.
Bumi plunged 69 percent in London last year amid boardroom infighting and financial probes in the U.K. and Indonesia. While Rothschild and the Bakries sought to unwind their collaboration, Bumi said it could only be achieved with the current board.
The tide turned in the board’s favor on Feb. 18 when Rosan Roeslani, an associate of the Bakries, sold about 24.2 million Bumi shares to three separate investors. That increased the amount of votes Rothschild needed to win at the meeting yesterday, as the voting rights associated with those shares had previously been excluded by a U.K. Takeover Panel ruling.
“Without the Takeover Panel intervention we would have been successful in 20 of 22 resolutions,” Rothschild said in a statement. “The current board no longer has a mandate and needs to move on. They should promptly resign.”
Rothschild said that about two-thirds of “non-aligned” shareholders voted against the board. He said before the meeting that he would maintain pressure on the board should he lose, and “wait and see” whether to support the separation proposal.
The removal of Tan was supported by 43 percent of shareholders, while 44 percent backed the ouster of Scott Merrillees, Bumi’s chief financial officer. Of the 12 directors Rothschild sought to remove, only CEO von Schirnding and Deputy Chairman Julian Horn-Smith received more than 60 percent support from shareholders, with 61 percent and 62 percent respectively.
Rothschild and the Bakrie Group, a palm-oil-to-property empire run by billionaire politician Aburizal Bakrie and his brothers, set up Bumi by bundling 29 percent of Bumi Resources and 85 percent of PT Berau Coal Energy. They sought to create an Indonesian “resources champion” in combining the coal companies, a tie-up that saw the Bakrie Group became the first major Indonesian business to tap the U.K. equity market.
The Bakries have proposed exchanging their 23.8 percent of Bumi for 10.3 percent of Bumi Resources. That plan would also see Bumi Plc sell the remaining 18.9 percent of its Bumi Resources stake for $278 million to the family.
The Bakrie Group welcomed the outcome of the meeting yesterday, saying it “gives the board a clear mandate to restore shareholder value by progressing with our separation proposal.” The group said it hopes Rothschild “joins our own move to restore value at Bumi by supporting our proposal.”
Tan will step down as chairman once an independent replacement is found, according to Bumi, which said it also plans to slim down its board. The company said it will continue to pursue potential claims where there is a prospect of recovery following a recent investigation conducted by Macfarlanes LLP.
Rothschild, who holds about 14.8 percent of Bumi stock according to data compiled by Bloomberg, had nominated former Leighton Holdings Ltd. head Wallace King as chairman and Brock Gill as CEO. He had also sought to reappoint himself to the board, and to bring in Indonesian businessman Hashim Djojohadikusumo.
The Financial Times reported Feb. 20 that Aburizal Bakrie may face Djojohadikusumo’s brother, Prabowo Subianto, in Indonesia’s 2014 presidential elections.
