* Delisting proposed by former chairman Samin Tan
* Founder Rothschild unlikely to be in favour-Investec
* London listing important for corporate governance
By Silvia Antonioli
LONDON, May 7 Shareholders in coal miner Asia Resource Minerals (ARMS), the Indonesia-focused miner emerging from years of bitter boardroom battles, are taking sides over a proposal to delist the company from London.
The management of ARMS, formerly Bumi Plc, has recently begun a process of rebuilding after its shares dropped almost 80 percent since its flotation in 2010, hit by shareholder in-fighting and a tough trading climate.
The company said late on Tuesday it was considering distributing shares in its sole subsidiary, Indonesian PT Berau , to existing shareholders and delisting the parent company from London.
The delisting plan was put forward by former chairman Samin Tan, the company's largest shareholder, with the intention of cutting costs associated with keeping the London-listed vehicle.
A delisting would wind up the company founded by financier Nat Rothschild, ARMS' second-largest shareholder, together with the Indonesian Bakrie family. They set up Bumi Plc in 2010 with the aim of giving London investors access to promising Indonesian coal assets.
"We can see the merit in the distribution of the PT Berau shares but it really would be a dramatic end to this whole Bumi/ARMS saga in London. We suspect major shareholder Rothschild may not be a supporter of the shareholder distribution option," said analysts at Investec.
Rothschild and the Bakrie family have exchanged allegations of mismanagement of Bumi, which culminated in a bad-tempered exchange on social media.
BATTLE OF EGOS
Two large shareholders told Reuters they opposed the plan and said being listed in London guaranteed a recognisable standard of corporate governance.
"I don't think institutional shareholders would vote in favour of the delisting unless there was a big cash premium attached because you instantly lose all the corporate governance that comes with the London listing," said Liberum analyst Richard Knights.
Delisting could also create difficulties for some of the funds invested in the ARMS that only have a mandate to invest in UK-listed companies, meaning they are not allowed to own shares in the Indonesia-listed PT Berau.
"First thing that needs to happen is the company has to return the maximum possible amount to shareholders. Money needs not be spent in a delisting," one of the shareholders who opposed the de-listing said.
A third shareholder said he did not have a strong opinion on the plan but was slightly in favour of a delisting to cut costs.
He feared however that the proposal could once again create counterproductive battles among the main shareholders.
"I hope they find a solution and that doesn't degenerate in another fight of egos. At the end of the day we all want the same thing, which is value creation," he said. (Editing by Keiron Henderson)