ARMS mulls proposal to distribute Berau shares

By Ruli Setiawan

LSE-listed Asia Resources Minerals plc (ARMS) said that a number of the company's major shareholders, including RACL and Borneo, have indicated a clear wish for the company's shares in IDX-listed coal miner PT Berau Coal Energy Tbk to be distributed in specie to shareholders, on the basis that they believe the simplified ownership would ultimately remove the need for a London based management team and listed vehicle, thereby reducing cost and increasing shareholder value and potentially allowing a distribution of cash in excess of US$500 million.

ARMS has nearly 80 percent shares in Berau, Indonesia?s fourth largest coal mining firm.

The company said in a statement Tuesday that certain other shareholders have, however, indicated a preference to maintain the existing corporate and governance structure.

?The board believes it therefore needs to undertake a careful and thorough review involving an active solicitation of shareholders' views on the future strategy for the company and an assessment of whether there are distribution options that would gain broad shareholder acceptance,? it said.

As previously indicated, ARMS intends to distribute at least $400m of cash to shareholders and is in the advanced stages of preparing a circular for shareholders to seek their approval for this to be implemented through a B-share scheme, which would deliver tax benefits for certain shareholders. This circular also incorporates details of a relationship agreement (the Relationship Agreement) with Nat Rothschild that would be voted on at the same meeting.

The company said it remains committed to implementing the distribution via the B-share scheme and the Relationship Agreement but has decided that before proceeding it should first determine whether to progress with a distribution of the company's shares in PT Berau because this would have implications for each of these items including, for example, the amount of cash that is distributed above and beyond $400m.

In light of these developments, the company is delaying its 2014 Annual General Meeting until Friday 27 June 2014, given that the decision as to whether or not to distribute the PT Berau shares will have implications for the nature of the board that will seek re-election at this meeting.

The company is aiming to reach a decision on whether to proceed with the PT Berau share distribution by the time the Notice of AGM is posted, which will be no later than 3 June.

ARMS also announced that Bob Kamandanu has been proposed as an independent non-executive director (INED) candidate under the Borneo Relationship Agreement and Wallace King has been proposed as an INED by Nathaniel Rothschild.

The proposed INEDs have not yet been appointed to the board of ARMS, but discussions are at an advanced stage and they may be appointed shortly, subject in the main to the outcome of discussions regarding demerger options.

Editing by Reiner Simanjuntak