LONDON (Yosefardi) – Bumi Plc schedules to vote on separation with Bakrie Group on December 4, 2013. Following the separation, the Borneo Group and RACL will together hold an economic and voting interest in the company of 47.6%.
In a circular to shareholders, Bumi Plc said the completion of the separation will deliver the disposal of the Company’s 29.2% interest in Bumi Resources at a 116% premium to the current market value of the interest.
Bumi Plc also will get US$501 million in cash (less transaction costs). Bumi Plc’s board intends to return at least US$400 million of this cash, equivalent to approximately £1.03 per Ordinary Share, to Shareholders in the near-term.
The balance of this cash retained by the Bumi Group may be used to repay debt in the Retained Group, be invested in Berau or otherwise be deployed to optimise Shareholder returns or to satisfy the Bumi Group’s commitments or obligations.
The separation will effect an exit from PT Bumi Resources, an asset that the company does not control or have significant influence over.
Bumi Plc is a mining group, not an investment company, and it should not retain an interest in a company over which it is unable to exert appropriate influence;
PT Bumi Resources is a highly leveraged company which faces significant refinancing requirements in 2014 and 2015. PT Bumi Resources has announced that it has entered into an agreement to settle US$1.3 billion principal amount of its remaining debt with China Investment Corporation.
However, there can be no certainty that this settlement will complete and it is currently uncertain what impact the settlement would have on the value of the Bumi Group’s holding of PT Bumi Resources Shares.
Bumi Plc will separate from the influence of the Bakrie Group and the Bakrie Relationship Agreement (which contains the right of the Bakrie Group to nominate for appointment the Chairman, Chief Executive Officer and Chief Financial Officer of the Company) will terminate.
And it will allow the company to focus purely on Berau, the fifth largest thermal coal producer in Indonesia, which is expected to produce 23 mt of coal in 2013.
Bumi Plc is also commencing arbitration proceedings against Rosan Roeslani, the former President Director of Berau, in connection with an interim payment required under the agreement entered into by the company and PT Berau Coal Energy Tbk (Berau) with Mr. Roeslani on 26 June 2013.
Roeslani has undertaken to transfer, or procure the transfer, to Berau of assets and cash with a value equal to US$173 million, and that an initial transfer of US$30 million in cash was to be made by Mr. Roeslani prior to 26 September 2013.
Mr. Roeslani failed to make this interim payment by the required date and the company is, therefore, commencing arbitration proceedings against Mr. Roeslani in relation to payment of this amount.