Nat Rothschild Says Bakrie Exit Wouldn't Resolve All Bumi Concerns

By Alex MacDonald

LONDON--Nathaniel Rothschild, one of the founders and major shareholder of coal miner Bumi PLC (BUMI.LN), said Thursday that challenges would remain even if the Bakrie family were to exit their Bumi investment since the remaining shares would still be concentrated in the hands of a small number of shareholders.

The powerful Indonesian Bakrie family has proposed an exit from Bumi that would severe all ties with the U.K.-listed company and Mr. Rothschild. The move would bring an end to a tumultuous period for the company, during which concerns were raised about Bumi's corporate governance standards and a probe was launched into alleged financial irregularities that have focused, among other things, on PT Bumi Resources TBk (BUMI.LN), Indonesia's largest coal producer, in which the Bakrie family has a significant interest.

"As has been noted over the last 12 months, there have been challenges in implementing appropriate standards of corporate governance and these have been a source of friction amongst the board members and shareholders," Mr. Rothschild said in a statement. Mr. Rothschild owns an 11.9% stake in Bumi, according to FactSet.

"Even if the Bakries exit, one of the key concerns that I share with other minority investors is that Bumi PLC would still face a concentration of ownership by a small number of closely related parties and such challenges would remain," he added.

The Bakrie family, through PT Bakrie & Brothers Tbk (BNBR.JK) and Long Haul Holdings, has offered to cancel their 28.4% stake in Bumi and pay an undisclosed amount in cash in exchange for Bumi's 29% stake in PT Bumi Resources, one of the jewels in the Bakrie family's crown.

The Bakrie family, through the Bakrie Group, also proposed paying cash within the next six months to buy Bumi's 85% stake in PT Berau Coal Energy Tbk (BRAU.JK), Indonesia's fifth-largest coal miner.

Mr. Rothschild said he would refrain from making any comment on the Bakrie offer until an independent investigation into alleged financial and other iregularities has been concluded.

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