January 20, 2014 / 5:46 PM / 4 years ago

UPDATE 1-Asia Resource Minerals gives Bakries more time for split

LONDON, Jan 20 (Reuters) - Coal miner Asia Resource Minerals Plc(ARM) has agreed to give the influential Bakrie family four more weeks to fulfill requirements for their split from the company, further delaying a step which could pave the way for the company’s turnaround.

Indonesia-focused ARM, previously known as Bumi Plc, has been hit by shareholder battles, allegations of wrongdoing and falling coal prices.

In a bid to revive the London-listed company, shareholders voted to split with the Bakrie family who co-founded it. The family now has until Feb. 21 to enable the long-awaited split or lose the $50 million they committed to the process.

“The Bakrie Group has agreed that the $50 million currently held in escrow will be transferred to ... (ARM) by 23 January 2014 and will only be repayable if the company is in material breach of its obligations,” ARM said in a statement.

Under the separation deal, the Bakrie family is to sell its ARM stake of 24 percent for $223 million to outgoing chairman Samin Tan, who in turn would become the single largest shareholder, with almost 48 percent.

The plan is then for the Bakries to use the sale income plus the $50 million deposit and additional cash of about $228 million to buy back a 29 percent stake in Indonesian miner PT Bumi Resources from ARM.

ARM has already twice this month granted the Bakries extra time to complete the deal, which originally had a deadline of Jan. 24.

BIG INCENTIVE

Given repeated requests for an extension, some shareholders have expressed concern that the Bakries might be having difficulty financing the cash portion of the deal.

“There is no such thing as a risk-free transactions, but you have got a $50 million non-refundable deposit so I suspect the Bakries have to find a way to complete this one way or the other,” said one shareholder who asked not to be named.

“I believe incentives are what drive any company so, you figure a 10 percent deposit is a pretty big incentive to complete the transaction.”

In exchange for the new extension, ARM has also imposed a new condition: no meeting of Bumi Resources shareholders must be called to discuss a debt restructuring deal with China’s sovereign wealth fund CIC before the split.

Shareholders in Bumi Resources earlier this month approved a proposed $1.3 billion debt-for-equity swap deal with CIC, even though ARM decided not attend the meeting or vote, but several more steps are needed to finalise the deal.

A source close to ARM said the latter’s board had found it difficult in the past to exercise control of Bumi Resources despite owning the largest stake of 30 percent, given the Bakries’ influence on Indonesia’s political and business scene.

The Bakries founded Bumi Plc in 2010 together with investor Nat Rothschild, with the aim of bringing promising Indonesian coal assets to London investors, but their relationship quickly soured.

The company’s shares have lost about three quarters of their value since listing and were trading around at 234.50 pence on Monday.

A spokesman for Bakrie Group declined to comment.

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