UPDATE 1-Indonesia's Bakrie family agrees terms of Bumi split
* Bakries agree $50 million break fee
* Agreement sets deadline of May 30
* Bakries will not do deal if Rothschild takes control of board
LONDON, Feb 12 (Reuters) - Indonesia's politically connected Bakrie family has agreed to a $640 million deal to sever ties with coal miner Bumi Plc, all but ending their ill-fated London adventure after two years of bitter boardroom battles.
Last October, as tensions between shareholders escalated, the family announced they planned to draw a line under the London deal. They then proposed a $1.4 billion deal to buy back with shares and cash the coal assets they brought into the company, set up with financier Nat Rothschild in 2010.
The Bakries, though, have faced opposition from both the board and Rothschild to the full plan to take back all the Indonesian assets. Both Bumi's current management and the hedge fund veteran and want to retain coal miner Berau, 85 percent owned by the London group, and avoid unravelling Bumi.
Both hope to revive Bumi, a company that was intended to bring undervalued assets to European investors, but which has instead become emblematic of institutional investors' worries about governance of foreign resources firms listed in London.
Under Tuesday's deal, Bumi's board agreed the family should pull out as a stakeholder and take its minority 29 percent share in Bumi Resources. That unit - over which the London company struggled to exert control - has been at the centre a probe into possible wrongdoing at Bumi's Indonesian operations.
Tuesday's terms outline a deal that will see the Bakries cancel an indirect 23.8 percent stake in Bumi in exchange for 10.3 percent in Jakarta-listed Bumi Resources.
Bumi Plc would then sell the remaining 18.9 percent stake it holds in Bumi Resources to the Bakries for $278 million in cash.
To ease investor concerns over the debt-burdened Bakries' ability to fund the cash portion of the move, Bumi said a $50 million portion of that sum was due by Friday, as a break fee.
The $278 million, moreover, will be placed in escrow within five days of a definitive agreement.
The deal is a step towards resolving tensions that have rattled investors and battered London-listed Bumi's shares.
But whether it will be carried out will hinge on the outcome of a shareholder meeting next week, at which Rothschild will seek to oust 12 of Bumi's 14 current board members, bringing in a team that includes his own return as executive director.
A Rothschild victory on Feb. 21 would invalidate the current deal, under conditions set by the Bakrie family, now bitter rivals of their one-time partner.
Rothschild, for his part, questioned the conditions set on the Bakrie exit and whether Tuesday's deal was achievable.
"If Bakrie (Group) is really exiting Bumi plc why do they care who they sell to?" he said in a statement.
"A $50 million deposit is equivalent to 13 pence per plc share. Since we launched our (shareholder meeting) the stock has risen from 265p to 404p, and this is not because of the current boards' efforts."
Bumi's volatile London-listed shares ended the day at 404 pence, up 4.9 percent.