Boardroom D-Day In London For Indonesian Coal Tycoon Bakrie

Look, no hands! (Image credit: AFP/Getty Images via @daylife)

Hell hath no fury like a financier scorned. Nat Rothschild?s bid to replace the board of Bumi plc, which controls coal mines in?Indonesia, reaches a climax Thursday at an EGM in London. Rothschild wants shareholders to overhaul the board and get to the bottom of fraud allegations against its operating units, which are run by the politically powerful Bakrie clan, Rothschild?s ally-turned-nemesis. The Bakries, who injected their coal mines into Bumi in 2010 as a way to raise cheaper capital, have a different idea: sell back the assets. Their proposal to the board is for a $640 million restructuring of Bumi plc that would return to shareholders cash and stock in Bumi Resources, a Jakarta-listed firm. The Bakries are reportedly?prepared to sell Visi Media Asia, which runs two Indonesian TV channels, in order to raise more capital. This is anathema to Rothschild and investors who feel that they?ve been sold short by the Bakries. The stock has fallen sharply since 2011 due to faltering coal prices and constant friction between Rothschild and his Indonesian partners.

Led by patriarch Aburizal Bakrie, a candidate for Indonesia?s 2014 presidential election, the Bakries have long used their mining assets as cash cows to support their diversified, debt-fuelled empire. This explains why they?re determined to wrest back control from Rothschild. Together with two other Indonesian tycoons, chairman Samin Tan and Rosan Roeslani, the Bakries hold 58% of the shares in the London-listed company, but their voting rights were capped at 30% by UK regulators. In a last-minute twist, Roeslani has sold a 10% stake to three new investors, including an Indonesian media tycoon who is a potential bidder for Bakries? TV assets. This sale is likely to boost the voting rights of the anti-Rothschild block. On his side, Rothschild has mustered Hashim Djojohadikusumo, a blue-blood Indonesian businessman and brother of presidential aspirant Prabowo Subianto. This alliance may be as much about politics as business. Rothschild?s proposal would elect Hashim to a board led by an Australian chairman, along with the financier as executive director. Yet it would quickly run into the same problem that has bedevilled Bumi plc from the start: how to work with the Bakries.

Source: http://www.forbes.com/sites/simonmontlake/2013/02/21/boardroom-d-day-in-london-for-indonesian-coal-tycoon-bakrie/

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