UPDATE 1-Miner Bumi strikes deal to claw back lost millions

Wed Jun 26, 2013 9:23am EDT

LONDON, June 26 (Reuters) - Indonesia-focused coal miner Bumi Plc has struck a deal with the former head of its Berau subsidiary to recover $173 million, most of the cash it said last month had been lost at the unit.

Bumi was co-founded by financier Nat Rothschild and Indonesia's influential Bakrie family, but has struggled in the past two years to overcome bitter boardroom battles, a probe into financial irregularities and the tumbling price of coal.

Its board now wants to overhaul the company by parting ways with the Bakrie family and concentrate on 85-percent-owned unit Berau, as opposed to a more problematic minority stake in Jakarta-listed Bumi Resources.

A deal to recover the lost cash at Berau is a key step towards that split and the crucial return to share trading after a two-month suspension.

Bumi said last month it had completed a review of irregularities in the accounts of Berau which identified expenditure of $201 million which had no clear business purpose, without elaborating. It said it would seek to recover the money.

The company told investors gathered at its annual meeting on Wednesday that one-time shareholder, former board director and ex-Berau boss Rosan Roeslani would transfer cash and assets to the agreed value of $173 million, in exchange for Bumi agreeing to drop legal claims.

Roeslani has made no admission of wrongdoing or liability in respect of the claims, Bumi said.

The outstanding $28 million, the company said, related to cash pre-dating the deal to fold Berau into investment vehicle Vallar, which became Bumi Plc.

Bumi shareholders will be asked to approve the deal when they vote on the split with the Bakrie family in coming months.

"There can be no separation without a recovery of the money," Bumi's outgoing chairman Samin Tan said, adding negotiations were held back in recent months by the executive team's focus on the audit of Berau and the need to restart share trading - suspended after annual results were delayed.

Bumi is now in talks with Britain's financial markets regulator to allow its shares to resume trade.

Rothschild, whose relationship with his Indonesian partners soured quickly after Bumi's listing, said on Wednesday that any cash not returned by Roeslani, a board director until December, should be reflected in the price of the split with the Bakries.

Britain's regulators and prosecutors, he said, "need to be all over this situation, bringing those responsible to justice".

Bumi is already working with the Serious Fraud Office.

BREAKING UP

Bumi's chief executive, Nick von Schirnding, said the terms of the split with the Bakries - as well as the divorce of the Bakries from their former partner, outgoing chairman Tan - were being hammered out and a deal could be announced within weeks.

Tan bailed out the Bakrie family last year and became a major shareholder in Bumi, through a vehicle jointly owned with them. Splitting that partnership is critical to separating the Bakries from the group as a whole.

While the Bakries have agreed to exchange cash and their shares in London-listed Bumi for the group's minority holding in Bumi Resources, the length of negotiations has raised questions over the family's ability to come up with the cash.

Von Schirnding said on Wednesday, however, that Bumi had received guarantees that the outstanding $228 million was available. He said "two large financial institutions" were involved, but did not name them.

A shareholder vote would likely be held after the summer.

Bumi earlier said it was on track to reach its 2013 production target of 23 million tonnes of coal.

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