* Board unanimous in rejecting Rothschild's proposal
* Wants to push ahead on exit from Bakrie Group, Bumi
* Appoints Eko Budianto as president director of Berau
* Shares down 3.3 pct
By Paul Sandle and Kate Holton
LONDON, Jan 29 Bumi Plc, the
London-listed Indonesian coal mining group riven by a
shareholder dispute urged investors on Tuesday to reject British
financier Nat Rothschild's proposal to replace the board and
back its own plan for peace instead.
Rothschild, who is locked in a bitter corporate governance
battle with Bumi Plc's co-founders, Indonesia's influential
Bakrie family, wants to remove at least 12 of the 14 current
directors and bring in a new board including himself.
Shareholders are due to vote on Rothschild's proposals at a
special meeting in London on Feb. 21.
Underlining its opposition to the proposals, the board also
announced on Tuesday the appointment of Eko Budianto to head
Bumi Plc's 85 percent-owned business Berau Coal Energy
, an appointment opposed by Rothschild.
Chief Executive Nick von Schirnding said the Bumi Plc board
was unanimous in its view that Rothschild's plan would lead to a
stalemate, continued shareholder disputes and further value
Instead the board wants to pursue a recovery plan starting
with a divorce from the Bakrie Group under a "separation
proposal" which would see Bakrie selling its direct 23.8 percent
stake in Bumi Plc in return for $278 million in cash and Bumi
Plc's 29 percent stake in PT Bumi Resources.
This would leave Bumi Plc to focus on its
majority-controlled Indonesian business, Berau Coal.
Von Schirnding said the separation proposal was currently
worth more than $580 million, including the $278 million in
"That value is trickling away over time," he told reporters
"The longer we prolong the in-fighting the less value will
remain for other shareholders."
For his part, Rothschild said that the Bakries would still
retain influence over the company if the separation proposal
went ahead because existing board members, such as chairman
Samin Tan, are linked to the family.
"Bumi is like a football team that's lost 20 matches in a
row. It's not going to start winning until it changes its
manager and its captain," said Wal King, who Rothschild wants as
the firm's new chairman.
Shares in Bumi were up 1 percent at 348 pence in late
trading on Tuesday.
Analysts at Nomura said the Bumi management's proposals were
a positive step and showed it was taking the task of cleaning up
the group seriously, but uncertainty remained.
"(They) are attempting to offer an alternative to
Rothschild's shareholder activism but the board will need to
make it through the EGM (extraordinary general meeting) for them
to be able to deliver on their vision," the analysts said.
The outcome of next month's shareholder meeting is by no
means certain. Last month, former Berau Coal head and Bumi
investor Rosan Roeslani resigned from Bumi Plc's board after UK
regulators ruled he had acted in concert with the Bakries as a
20.4 percent shareholder and that henceforth the total voting
power of the Bakries camp would be capped at 29.9 percent.
The ruling gives greater weight to the votes of other
shareholders with Rothschild now having an effective 18.2
percent, although his economic interest is about 11 percent,
according to Thomson Reuters data.
Rothschild also has the public backing of some top
institutional shareholders including Schroders and Taube, Hodson
and Stonex Partners.
The Bakries and Rothschild got together in 2010 to bring
promising Indonesian coal assets to the London market by
reversing them into Vallar, Rothschild's listed investment
vehicle, and renaming it Bumi Plc.
But the share price has plunged by 70 percent, not helped by
falling coal prices, an investigation into allegations of
financial wrongdoing and the shareholder battles.
The Bakries said last year they planned to unwind their
interests in the company, drawing a line under their London
listing adventure and taking back the assets they and partners
such as Roeslani brought to Bumi Plc.
Von Schirnding said if Rothschild's resolutions were passed
the Bakries would block the deal to separate the Bakrie Group
and Bumi Resources, and they could enforce their right to
appoint the chairman, chief executive and finance director of
"We would like to make it categorically clear that if Nat
Rothschild's proposal to replace the current board succeeds then
we will not proceed with our proposed separation from Bumi," the
Bakries said in a statement later on Tuesday.
The resulting legal dispute could take months, if not years,
to resolve, Schirnding said, destroying further value for
"My intention here is very clear; I want to move this
company out of the mess it is today," he said.
He confirmed that Budianto would replace Roeslani at the helm
of Berau, and Tony Redman, a former technical director at Anglo
American, had been appointed as consultant technical
The group also said that the two directors who Rothschild
has said should stay on the board, Steven Shapiro and Graham
Hearne, do not support his proposals and will resign if the
proposals are passed by shareholders next month.