Coal news and updates

Asia Resource Minerals, the coal mining business being formed from the rump of Bumi plc, is set to receive $65m less than the $501m in cash originally envisaged by the terms of a revised separation deal to enable Indonesia’s Bakrie family to exit the coal miner.

Recommendation of the reduced offer on Wednesday came as the recently rebranded company confirmed that Bakrie Group, controlled by one of Indonesia’s most powerful political and business dynasties, had failed to raise the $228m required to fulfil the original terms of the separation agreement struck last July.

 

Instead, after raising $163m, the Bakrie Group now plans to reduce the amount of cash the rump London-listed company can expect to receive on completion of the deal to $436m.

In spite of the shortfall, a committee of independent directors at Asia Resource Minerals said on Wednesday that the revisions “would not be material in the context of the separation transaction” and the reconfigured proposal “would remain clearly in the best interest of the shareholders”.

However, the company’s stance was immediately criticised by Nat Rothschild, the financier who formed and floated Bumi plc in 2010 and has remained a leading and persistently disaffected shareholder of the renamed company.

“It is hard to argue that gazundering $65m from minority shareholders is not a material change,” he said.

A source close to the company defended it against accusations that it had effectively agreed to be haggled down by the Bakries.

He argued the revised terms still protected the prospect of receiving the bulk of notional cash value agreed for its stake in the Bakrie-controlled Bumi Resources at the time the separation agreement was struck last summer. Bumi Resources share price has subsequently fallen sharply, devaluing the current market value of Asia Resource Minerals’ holding of slightly more than 29 per cent.

“If the Bakries haven’t got the money, they haven’t got the money,” he said. “Asia Resource Minerals shareholders will still receive the bulk of cash for shares [in Bumi Resources] that are now worth half in the market.”

As part of the revised terms, Asia Resource Minerals would maintain a rump stake of slightly less than 4 per cent in Bumi Resources rather than dispose of its entire 29.2 per cent holding.

Since the agreement of the restructuring plan, the Bakries have failed to meet a series of deadlines to pay the $501m agreed for Asia Resource Minerals’ stake in its coal business.

That total includes $223m scheduled to be paid by the vehicle of Bumi plc’s chairman Samin Tan to the Bakries in return for their own 23.8 per cent crossholding in the London-listed venture.

Mr Tan is expected to emerge with more than a 47 per cent stake in the rump company, with Mr Rothschild holding about 16 per cent under the terms of the restructuring plan. Mr Tan has also previously missed a deadline to demonstrate his ability to finance his part of the deal.

Mr Rothschild finally agreed to back the terms of the $501m deal in December after months of clashes with its board and executives about its dealings with the Bakries, his previous allies in forming Bumi plc.

Shares in Asia Resource Minerals closed at 243.5p on Wednesday, less than a quarter of their original price when it floated as a cash-shell in 2010.

 

Source: ft.com