Bumi split back on as Samin Tan secures funding

Bumi split back on as Samin Tan secures funding

The Bakries then plan to pay $ 501m to buy out Bumi’s 29.2pc holding in PT Bumi Resources, the Indonesian thermal coal producer that they control.

The deal will leave Bumi wholly focused on its 85pc-owned subsidiary Berau Coal, with the London-listed group planning to return about $ 400m to shareholders.

As investor advisory firm Institutional Shareholder Services said in a note to clients last week, with Mr Tan standing to receive almost $ 200m of the cash return once the deal closes, “his portion of the transaction mostly finances itself”.

However, it is thought that Mr Tan first needed to exchange loans he already had against his Borneo vehicle for larger borrowings against his Bumi shares, resulting in a complex negotiation with his banks. He may be obliged to disclose his financing arrangements to Bumi shareholders.

As long as Mr Tan’s financing satisfies Bumi’s independent directors and the UK Listing Authority, the group will be able to publish a new prospectus and set a fresh date for its extraordinary general meeting.

One complexity, however, is that takeover rules stipulate that shareholders must be given 21 days notice of an EGM from the date of publishing a prospectus – giving only a small window before Christmas. Bumi’s legal advisers are understood to have tried this weekend to get permission for those rules to be waived.

ISS said last week that it had a number of reservations over the deal. They included the failure, so far, of former director Rosan Roeslani – an ally of the Bakries – to return a promised $ 173m of missing funds and the fact that shareholders will end up in a company controlled by Mr Tan. “The transaction is thus a bet on character more than governance structure,” ISS said.

Even so, it recommended voting in favour of the deal, given “the economics of the transaction” and the “need to terminate the relationship with the Bakries”.

Corporate governance advisers Pirc took an opposite position, recommending that shareholders vote against all but one resolution – the planned change of the company name to Asia Resource Minerals.

“Shareholders are being asked to approve a transaction with many uncertainties and the case of missing funds still being unresolved”, Pirc said.

Nat Rothschild, the financier who built Bumi via a $ 3bn deal with the Bakries and speaks for 20pc of the shares, is yet to disclose how he would vote on the separation transaction.

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