LONDON (Reuters) - Financier Nat Rothschild, co-founder of Bumi Plc BUMI.L, lost his bid to oust the coal miner's board on Thursday, after a public showdown with his one-time colleagues and Indonesia's influential Bakrie family.
Shareholders voted in favour of keeping Bumi's chairman and chief executive and most of the current board, rejecting 19 of the 22 proposals made by hedge fund veteran Rothschild.
It was a key step in the unwinding of Rothschild's venture with the politically connected Bakries, set up in 2010 to bring promising Indonesian assets to London investors. The partnership rapidly soured into a battle that has involved two rival candidates for Indonesia's presidential elections next year.
Rothschild's own bid to rejoin the board, as executive director, received the least support from voting shareholders.
Rothschild, however, called the board's victory "pyrrhic", pointing to support from the company's heavyweight Indonesian shareholders. He said in a statement issued after the vote that the current independent directors had lost the confidence of minority shareholders and should resign.
"I only have one aim - and I have around 36 million shares in this company, together with my cousin - I want the share price to appreciate," Rothschild said before the results were released, flanked by his mother in a show of support from the banking dynasty.
He had wanted to oust 12 of 14 board members and bring in a new team which included himself, proposals which he said would have helped draw a line under past dramas and revive a share price languishing at a third of its June 2011 level.
The current board, though, says it has already agreed a split with the Bakries - something all sides agree is critical - in a deal that would have been jeopardised if Rothschild returned to the board, and says it is already reviving one of the world's largest thermal coal exporters.
Bumi said in a statement that it will now prioritise the split and will put the deal to shareholders for approval, as well as embarking on a restructuring of its board, which it has said will be become smaller and led by a new chairman.
Rothschild's campaign was damaged by a last-minute stake sale by a major Indonesian investor earlier this week, freeing up shares whose voting rights had been frozen by regulators.
Indonesian investors hold 30 percent of the voting rights and the impact of the freed shares - an extra 10 percent - swung the pendulum against Rothschild's proposals. The financier and investors who had declared support, held roughly 30 percent.
The votes, totted up after a meeting at in a central London military hall, showed that the defeat of Rothschild's plan was not entirely comprehensive. Around 40 percent of voting shareholders supported his resolutions to remove chairman Samin Tan and Bumi's chief executive, Nick von Schirnding.
He was also successful in his plan to remove two directors, Bakrie ally Nalin Rathod and Jean-Marc Mizrahi, and with his proposed addition of diplomat Richard Gozney to the board.
Rothschild, the 41-year-old hedge fund veteran known for his bulging contact book, won investors' plaudits when he set up Bumi with Indonesia's influential Bakrie family.
"To me, this idea of an Indonesian company married to an English (board) had the makings of a brilliant success," said one small shareholder, pensioner Michael Napier.
But tensions between Rothschild and his Indonesian partners came to a head last year, after Bumi announced an independent investigation into potential wrongdoing at its Indonesian subsidiaries. Weeks later, the Bakries said they wanted to draw a line under the London adventure and pull out their assets.
All sides agree Bumi has been a disastrous foray. Its shares are down some 66 percent since a 2011 listing - even with a recovery since the start of the year - as boardroom battles added to the impact of falling thermal coal prices.
Many investors suggest the coal venture has bruised London's reputation as well as that of Indonesia. While the London market has long seen successes and failures, Bumi has highlighted corporate governance failures elsewhere in the sector, and it contributed to regulators' decision to tighten listing rules.
All sides also agree on the need to part ways, just not how.
"The right idea would be to keep Bumi as clean as possible and move on. But whoever wins, the damage is done and it may take a big PR and corporate exercise to restore investor confidence," said analyst Cailey Barker at Numis Securities.
Adding to the complexities, Thursday's vote also pitted the families of one Indonesian presidential candidate against another. Aburizal Bakrie, patriarch of the Bakrie family, is running for the Golkar party in 2014 elections, while the brother of Rothschild backer and would-be board member Hashim Djojohadikusumo - former general Prabowo Subianto - is a rival.