* Rothschild proposals would oust 12 of 14 board members
* Outcome unclear after Indonesian investor sells stake
* Bumi shares down almost 70 percent since listing
By Clara Ferreira-Marques and Janeman Latul
LONDON/JAKARTA, Feb 21 Shareholders of coal
miner Bumi Plc will vote on co-founder Nat
Rothschild's overhaul plan and a bid to oust the current board
on Thursday, in a public showdown between the financier and his
The outcome of the vote, which will decide the short-term
future of one of the world's largest exporters of thermal coal,
hangs in the balance after a last-minute stake sale by a major
Indonesian investor earlier this week.
That sale freed shares previously frozen by regulators. The
stock, roughly 10 percent, is now held by two hedge funds and an
Indonesian media mogul, who could swing the results. They are
expected to abstain or vote against the proposals.
Rothschild, the 41-year-old hedge fund veteran known for his
bulging contact book, set up Bumi with Indonesia's politically
connected influential Bakrie family.
But the partnership, intended in 2010 to bring promising
Indonesian assets to London investors and to unlock value by
applying UK governance rules, soured within months, and the two
sides have been locked in a bitter battle since.
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 67 percent since a 2011 listing, even with a recovery
since the start of the year, as board room battles added to the
impact of falling coal prices. Many investors suggest the coal
venture has bruised London's reputation as well as that of
While the London market has long seen successes and
failures, Bumi has highlighted corporate governance failures
elsewhere in the oil and mining sectors, and it contributed to
regulators' decision last year to tighten listing rules.
All sides also agree on the need to part ways, just not how.
The current board struck a $640 million deal last week which
would see the Bakrie family exiting their share in the London
company in exchange for cash and a minority stake in
Jakarta-listed Bumi Resources.
But Rothschild argues the board has not defended shareholder
interest, or done enough to focus on operations. He wants a
split, but says the current agreement does not solve underlying
issues, nor is it secure, as the Bakries need to raise funding.
A Rothschild victory and his own return to the board,
though, would scupper the Bakrie's current exit deal.
"That is the risk people are worried about - that Nat can't
cement a deal with the Bakries," said analyst Cailey Barker at
Numis Securities in London.
"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
Rothschild has said the increasingly acerbic fight is about
investment and not personalities. But his involvement in
spearheading a campaign against his erstwhile partners -
punctuated by lengthy press releases and full-page newspaper
adverts - means it would certainly be perceived by many
investors as a personal loss.
"One can say all sorts of things about Nat Rothschild - that
he's naïve and foolish, but he has been very brave about backing
his original investment with more investment," a fund manager at
one of Bumi's top 10 institutional investors said, who declined
to speak on the record because of the sensitivity of the issues.
"He's tried to do the right thing I think, he's tried to
replace a board and a management that, whether they were
complicit or not, allowed things to happen on their watch."
Others are less generous, questioning Rothschild's nous.
Adding to the complexities, Thursday's vote will also pit
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.
Shareholders will vote on Rothschild's proposals to oust 12
of 14 directors, including Indonesian directors with links to
the Bakries, the current chairman and chief executive. They will
also vote on his proposed new team, with the former boss of
Australian construction firm Leighton Holdings as chairman, and
himself as executive director.