T

he future of troubled Bumi plc is in the hands of its minority investors as the board of directors has indicated support for one or two major shareholders who are struggling to retain control of the company.

In a circular to shareholders ahead of the Feb. 21 extraordinary general meeting (EGM), Bumi plc’s directors unanimously called for a vote against the resolutions proposed by Nathaniel Rothschild, the company’s cofounder.

“The alternative put forward by Mr. Rothschild will lead to a stalemate, continued shareholder infighting and further value destruction,” the circular says.

The letter says that the Rothschild proposal would only cause major shareholder Bakrie Group — which indirectly holds a 23.8 percent stake — to cancel its plan to exit the London-listed company through a shareswap and a US$278 million cash transaction.

The funds, it said, could be used to develop Bumi plc’s business in Indonesia through 84.7 percent ownership of PT Berau Coal Energy.

Rothschild, through his investment vehicle NR Investment, submitted a letter on Jan. 7 to Bumi plc calling for an EGM to shake up board of directors, including removing 12 out of 14 current board, the chief executive officer and chief financial officer. Rothschild has proposed eight new names, including himself, for a new board.

The proposal marked new friction between Rothschild and the Bakrie Group, following their prolonged dispute over control of two Jakarta-listed miners PT Bumi Resources and PT Berau Coal Energy.

The shake up is Rothschild’s attempt to oust the Bakrie Group and all of its appointees.

Rothschild resolution needs a simple majority vote to be passed. Both Rothschild and Bakrie Group are short of votes. Rothschild currently has an 18.2 percent stake while the Bakrie Group has lost out as the UK takeover panel ruled it and other shareholders (PT Borneo Lumbung Energi & Metal — 23.8 percent, PT Bukit Mutiara — 9.8 percent) are restricted to only 29.9 percent of voting rights.

A number of minority shareholders in Bumi plc, such as Sofaer Capital Inc. (around 1 percent), Brompton Asset Management (around 1 percent) and Schroders (around 3.5 percent), will reportedly support Rothschild’s resolutions.

Bakrie Group senior vice president Christopher Fong said in a recent email that the group wouldn’t be drawn into a public debate on the views of minority shareholders, “We have very strong views, are legally protected and are portraying this position to stakeholders in a private manner.”

Bumi plc has proposed strategies (recovery of all of Berau’s $75 million investment in funds managed by Chateau Asset Management, postponement of $290 of capital expenditure, reduction of stripping ratios and hauling distances) to keep the company on track to produce 23 million tons production this year and 30 million by 2015. Management changes are taking place in Berau with the replacement of president director Rosan Roeslani with Eko Budianto, operations director of PT Berau Coal.

Rosan insists that he has planned his “resignation” from Berau for a quite long time. “From the beginning, we were prepared for a change in the company’s leadership.”

Rosan, who has been Berau’s president director for about three years and is the founder of Recapital Group, which through PT Bukit Mutiara, held majority stake in Berau prior to the Bumi plc acquisition.

Rothschild has criticized Rosan’s replacement Eko Budianto as a continuation of Berau’s ties to the Bakries.