Bumi PLC presses ahead with December vote to split from Bakrie group

London-listed coal company Bumi PLC said on Friday it was pressing ahead with a December vote on a planned split with the group?s co-founder, the Indonesian Bakrie family, amid questions whether the latter has the required funds to complete the transaction.

The company said in a circular to independent shareholders that the vote will be held on December, providing details arguments that it would be in the interest of the shareholders and the company to end its ties with the Bakrie family.

Bumi was formed in 2010 to bring Indonesian coal assets to London investors. However, boardroom fights between the co-founders, Nathaniel Rothschild and the Bakries, ensued in the following years amid falling coal prices and question over corporate governance at Indonesia-listed PT Bumi Resources Tbk, in which Bumi has 29.2 percent interest, the Indonesian largest coal miner and the jewel asset of the Bakries.

Under the proposed complex deal, Bumi will sell its 29 percent stake in Bumi Resources to the Bakries. In return, the Bakries will sell its 24 percent stake in Bumi Plc to Samin Tan, their current partner and Bumi's outgoing chairman, for US$223 million. Bakrie Group then would buy back Bumi's 29% stake in Bumi Resources for $501 million, a 116% premium to the recent market price, the circular said.

Bumi PLC said in the circular that the transaction would benefit the independent shareholders as a whole not only because it would provide premium price for the Bumi Resources shares, but would also end its ties with the Bakries, allowing the London miner to make a fresh start and focus on its other coal asset PT Berau Coal Tbk, Indonesia?s fifth largest coal firm.

Nick von Schirnding, CEO of Bumi, said: "The Separation is financially attractive and value accretive. Approving the Separation will crystallise a 116% premium above market price for our stake in Bumi Resources at a price of $501m. The transaction will allow us to move forward to create a focused coal producer with a clear strategy for the further restoration of shareholder value."

The circular also said that Bumi shareholders will have to approve a waiver that would allow Mr. Tan to double his stake in Bumi without having to make a takeover offer for the company, in accordance with U.K. rules. Shareholders also would vote on a proposal to change Bumi's name to Asia Resource Minerals PLC.

The complex deal is meant to happen simultaneously, but it could fall apart before its expected mid-December closure if Bakrie Group fails to come up $278 million in cash?the amount owed to Bumi after taking into account proceeds from the stake sale to Samin Tan.

"We have repeatedly sought assurances on financing," Nick von Schirnding was quoted as saying late Friday, but "we have not had proof of funding." Tan is required by regulatory rules to show proof of funds by Nov. 20; Bakrie Group has to show proof of funds only by the close of the deal.

Meanwhile, the Bakries seem to brush off questions over its financing ability to complete the propose deal. Chris Fong, a Bakrie Group spokesman, was quoted as saying that the Bakrie Group has no intention of losing the $50 million already put in escrow as a breakup fee, and that the balance would be made available at the right time.

Elsehwere, Bumi has also been trying to recover cash lost at Berau Coal after it reached a deal with a former executive, Rosan Roeslani, to claw back $173 million. It said in the circular that it had now begun arbitration proceedings after Roeslani failed to make an initial payment of $30 million in cash by the September 26 deadline.

Editing by Reiner Simanjuntak