UPDATE 2-Coal miner ARMS to return $400 mln after split from Bakries

Tue Mar 25, 2014 1:13pm EDT

* ARMS gives no timeframe for $400 mln return

* Also does not specify in what form return will take place

* Shareholders say hope ARMS will return more

* UK market watchdog investigation into ARMS ongoing

* Founders exchange insults on Twitter (Adds Nat Rothschild, ARMS CEO comments, Twitter spat)

By Silvia Antonioli and Stephen Eisenhammer

LONDON, March 25 (Reuters) - Coal miner Asia Resource Minerals Plc (ARMS) has completed a long-awaited separation from its co-founding Bakrie family and intends to return $400 million to shareholders, the company said on Tuesday.

Indonesia-focused ARMS, previously known as Bumi, was founded in 2010 by the influential Bakries and financier Nat Rothschild, with the aim of giving London investors access to promising Indonesian coal assets.

But the business suffered from boardroom rows, allegations of wrongdoing and falling coal prices. Its shares have lost almost 80 percent of their value since the business was set up.

Evidence of the extent to which the relationship between the company founders soured was visible in a fiery exchange on Twitter after the separation was announced, in which Rothschild and Adika "Aga" Nuraga Bakrie, a member of the Bakrie family, exchanged insults calling each other "dumb".

To revive the business's fortunes, shareholders voted in December to split from Indonesia's Bakrie family, but this took longer than expected due to difficulties of raising the necessary cash.

With the split completed, ARMS will focus on turning around its other main Indonesian subsidiary, Berau Coal, while giving up a stake in Asia's top thermal coal exporter PT Bumi Resources.

"I feel vindicated. There were a number of stakeholders saying this would never happen. I can't say it has been easy, it was a complicated transaction, but to have achieved this is excellent for our shareholders," ARMS Chief Executive Nick von Schirnding said in a phone interview.

"Our focus is on our subsidiary now. We need to regain credibility and today's announcement is the first step in that direction."

As part of the separation process, outgoing ARMS Chairman Samin Tan bought the Bakries' 23.8 percent stake in ARMS through investment vehicle Borneo Lumbung Energy & Metal Tbk. ARMS sold its 29.2 percent stake in Jakarta-listed miner PT Bumi Resources to the Bakries for $501 million. The deal pushed Borneo's ARMS stake to 47.6 percent.

GIVE ME MY MONEY

ARMS said it would return $400 million to shareholders but did not give any timeframe and did not specify in what form the money will be returned.

Shareholders welcomed the completion of the separation but said they hoped ARMS would return closer to the $501 million it got from the deal.

"I think it's important to return the maximum amount of money because there is no appetite from the major shareholders, certainly not from me, to entrust money with the management team in London to redeploy that capital," Rothschild said.

"We want the business ... to be run as efficiently as possible and for all dividends to be passed through to shareholders."

ARMS said it was cooperating with regulatory investigations. Britain's Financial Conduct Authority (FCA) and the Takeover Panel, an independent body that supervises takeovers to ensure fair treatment for all shareholders, are investigating the company's formation in 2010 and subsequent events.

Last year Rothschild, who has a stake of about 16 percent in ARMS, had asked the FCA to look into whether ARMS made misleading statements to the market.

ARMS said it would now try to trace and return to shareholders money the company says is owed by the former head of its Berau subsidiary Rosan Roeslani.

The company in November started arbitration proceedings seeking to recover $173 million from Roeslani in Singapore, but said on Tuesday it will take all appropriate actions with authorities in the UK, Indonesia and other relevant jurisdictions. (Editing by Jane Merriman and David Holmes)

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