UPDATE 1-Bumi Plc says pressing ahead with Indonesian inquiry

Wed Oct 17, 2012 12:17pm EDT

By Clara Ferreira-Marques

LONDON Oct 17 (Reuters) - London-listed miner Bumi Plc is pressing ahead with an investigation into alleged financial irregularities at its Indonesian operations, and will not recommend an offer to split the group until the inquiry is at or near completion, it said on Wednesday.

Bumi, one of the world's largest thermal coal exporters, received a $1.38 billion proposal last week from the Bakrie family, which co-founded the miner with financier Nat Rothschild two years ago, that would allow the Indonesian family to exit their stake and take back the firm's operating assets.

The offer followed the announcement by Bumi of possible wrongdoing at some of those assets - including part-owned Bumi Resources, the jewel in the Bakrie crown. The allegations prompted an independent investigation, being led by London law firm Macfarlanes, and heightened already strained relations between Bumi shareholders.

Bumi, which confirmed the board had appointed investment bank Rothschild to evaluate the offer and advise directors, said it had not yet formed a view on the Bakrie proposal.

"The board will not make any recommendations regarding the (Bakrie) proposals until the investigation is appropriately advanced," Bumi said in a statement.

If executed in full, the proposed "divorce" could leave the London-listed firm, a shell until the deal with the Bakries in 2010, with no operating assets.

The Bakrie family want to swap their 23.8 percent stake in Bumi for part of Bumi's shares in Jakarta-listed Bumi Resources, They would then buy the remainder of Bumi's holding in Bumi Resources and, in a third step next year, purchase Bumi's majority stake in another Bumi-owned coal producer, Berau.

Several sources have questioned whether the debt-burdened Bakrie family can raise the necessary cash, and Wednesday's statement from Bumi's board said directors would consider both the value and the "deliverability" of the three proposed deals.

One source familiar with the matter said that while shareholders supported the first two steps, institutional investors had told the company they would prefer to keep 85-percent owned Berau, particularly as Bumi would retain an Indonesian champion in the form of coal tycoon Samin Tan, chairman and core shareholder.

"It is not on the agenda at the moment," the source said, of the Bakrie offer to buy Bumi's majority stake in Berau.

Bumi reports its quarterly production numbers on Oct. 31