A Call to ARMS: The dumb and the dumber at Bumi
Published by MAC on 2014-04-01Source: Reuters, Daily Mail
The curtain has fallen on the latest act in the long-running saga of the split of Bumi Resources & Bumi plc.
It was accompanied by a twitter spat between Nat Rothschild and Aga Bakrie calling each other "dumb", following the big Bumi split. Nat Rothschild kindly opens up to describe Bumi Resources as a "worthless pile of turd".
We are left with Bumi Resources moving ahead with a US$1.3 billion 'debt swap', where the China Investment Corp. will get a sizeable chunk of Bumi Resources' shares, further stacking that particular house of cards. Aburizal Bakrie continues with his presidential bid which, even if he doesn't win, will no doubt maintain the Bakrie family's profile and hold on Indonesian political life.
In turn, Rothschild and Co., aka Bumi plc, aka Asia Resource Mineral (ARMS), are left with Berau Coal. As cowboy companies go, even for Indonesian coal mining companies, this mine is out there in the 'Wild East', with reports of displacement of villages, environmental impacts and conflicts (and that's according to Bumi's own 2012 annual report).
The court case against the previous CEO, Rosan Roeslani, for the missing US$173 million continues in Singapore. (Rosan Roeslani seems to be impervious to all this with stories of hotels in the South of France and buying stakes in Italian football clubs still circulating.)
Throughout all this, Nat Rothschild appears to like playing the righteous shareholder with his calls for good governance, transparency and, most recently, pay cuts for Bumi / ARMS directors.
However, perhaps a flash of his real colours comes through in one of his pronouncements following the separation with the Bakries, where he says: "I look forward to strengthening the board by adding a world-class independent non-executive director soon after the separation, and then it is over to Samin to ruthlessly cut costs in Indonesia."
'Ruthless cost-cutting' of a London-listed company digging up coal in Indonesia to sell to China doesn't sound that righteous.
ARMS outlines comeback plan as fighting founders split
Silvia Antonioli
Reuters
31 March 2014
LONDON (Reuters) - Asia Resource Minerals, the Indonesian miner emerging from years of bitter shareholder in-fighting, said on Friday it would now focus on restructuring its business to combat weak coal prices.
ARMS, previously known as Bumi, finally reached a deal on Tuesday of this week to split with co-founding family the Bakries and begin the process of rebuilding a company that has seen its shares drop almost 80 percent as boardroom rows and allegations of wrongdoing exacerbated a tough trading climate.
London-listed ARMS owns 85 percent of PT Berau, Indonesia's fifth producer of thermal coal - used in power generation - and now plans to cut exploration and mining costs to counter falling prices that caused its 2013 core profit to almost halve.
"We now look forward to maximising the opportunity at PT Berau as we begin a new chapter in the company's life," said chief executive Nick von Schirnding.
"In the continuing weak environment for thermal coal prices we remain resolutely focused on cost reduction and asset optimisation."
ARMS also intends to slash contractor rates and reduce fuel usage while refinancing debt at a lower interest rate.
The miner has said it plans to boost output growth by 10 percent in 2014, subject to negotiations with Indonesia on increasing the quota on the export of thermal coal.
But von Schirnding reiterated on Friday that ARMS would curtail production promptly should coal prices fall further and make some output unprofitable.
"This is all about mining profitably and should we see further weakness in coal price, yes, we will curtail production with no hesitation," von Schirnding said.
Battered Prices
ARMS was founded in 2010 by the Indonesian Bakrie family and financier Nat Rothschild, with the aim of giving London investors access to promising Indonesian coal assets.
Since its creation however, coal prices have been battered by excess supply and weakening demand growth from emerging markets. About 20 percent of the world's producers are currently loss-making, according to industry sources, and coal miners around the world have closed mines and cut staff.
Against this backdrop, the relationship between the Bakries and Rothschild soured and the company was battered by boardroom battles and recriminations on all sides.
When ARMS announced its long-awaited split with the Bakries on Tuesday, it sparked bitter posts on Twitter between a Bakrie family member and Rothschild, a member of a prominent dynasty of bankers.
Von Schirnding said on Friday he was "confident the company was in a better position to deliver value to our shareholders" but when asked by journalists whether 2014 was ARMS' toughest year so far, responded: "I think it is."
ARMS posted earnings before interest, tax, depreciation and amortisation (EBITDA) of $176 million in 2013 - 45 percent below the previous year despite the company increasing production by almost 12 percent to 23.5 million tonnes of coal.
It has not given any earnings outlook for 2014, but has said it intends to distribute $400 million to shareholders, either by a straightforward dividend or through a B shares scheme, which is potentially more tax-efficient for shareholders.
ARMS is also looking to refinance $450 million in bonds due to expire in 2015 hoping to obtain a lower interest rate.
Shares in the company were up 1.2 percent by 1305 GMT, in line with the broader mining sector.
(Editing by Sophie Walker)
Asia Resource Minerals completes split from Bakries
Silvia Antonioli & Stephen Eisenhammer
Reuters
26 March 2014
LONDON - Coal miner Asia Resource Minerals (ARMS) has completed a long-awaited separation from its co-founding Bakrie family and it now in a position to return $400 million to shareholders, the company said on Tuesday.
Shares in Indonesia-focused ARMS, previously known as Bumi Plc, was founded in 2010 by the influential Bakries and major investor Nat Rothschild, with the aim of giving London investors access to promising Indonesian coal assets.
But the business has suffered from boardroom rows, allegations of wrongdoing and falling coal prices. Its shares have lost almost 80 percent of their value since the business was set up in 2010.
To revive its fortunes, shareholders voted to split from Indonesia's Bakrie family but this took longer than expected due to difficulties of raising the necessary cash.
"It has been a long and difficult process and we have overcome numerous challenges along the way to achieve a highly attractive outcome for our shareholders in the circumstances," Nick von Schirnding, ARMS CEO, said in a statement.
As part of the separation process, ARMS's outgoing chairman, Samin Tan, bought the Bakries' 23.8 percent stake in ARMS through its investment vehicle Borneo Lumbung Energy & Metal Tbk . ARMS sold its 29.2 percent stake in Jakarta-listed miner PT Bumi Resources to the Bakries for $501 million. The deal pushed Borneo's ARMS stake to 47.6 percent.
With the split completed, ARMS will focus on turning around its other main Indonesian subsidiary, Berau Coal.
"The company now needs to move forward unencumbered and resolve historical legacy issues and plan a path forward that would benefit all stake holders," one ARMS shareholder said.
ARMS said it would return $400 million to shareholders but did not give any time-frame for that and did not specify in what form the money will be returned.
A second shareholder in the company said he hoped ARMS would return closer to the $501 million it got from the deal. "I am really thankful there has been a clean divorce with the Bakries but why leave $100 million with the London company? That's just a shell," he said in a phone interview.
"They should leave only a couple of millions to pay for corporate expenses and return the rest to shareholders. They should also distribute some shares in the Berau subsidiary to the shareholders."
ARMS said it will now try to trace and return to shareholders money the company says is owed by the former head of its Berau subsidiary Rosan Roeslani.
The company has already started arbitration proceedings against Roeslani in November in Singapore but said on Tuesday it will take all appropriate actions with the appropriate authorities in the UK, Indonesia and other relevant jurisdictions. (Editing by Jane Merriman)
Bakries pay cash to Asia Resource Minerals to seal split
Reuters
24 March 2014
LONDON - Coal miner Asia Resource Minerals (ARMS) said its co-founding Bakrie family had paid the $278 million cash portion of a long-awaited deal to split from ARMS, which it hopes will end shareholder battles.
Everything is now in place to complete the separation by March 25, ARMS said on Friday.
"All Bakrie Group funding required to complete the separation transaction is now in holding accounts at the escrow bank," the London-listed company said in a statement.
Indonesia-focused ARMS, previously known as Bumi Plc, has been hit by shareholder battles, allegations of wrongdoing and falling coal prices in the last few years.
To revive its fortunes, shareholders voted to split with Indonesia's Bakrie family, which founded the business in 2010 together with investor Nat Rothschild.
The deal agreed last year will separate ARMS from PT Bumi Resources, Asia's top thermal coal exporter, and focus its turnaround efforts on its other main Indonesian subsidiary, Berau Coal.
Under the terms of the complex deal, ARMS's outgoing chairman, Samin Tan, has agreed to buy the Bakries' 23.8 percent stake in ARMS through Indonesia's Borneo Lumbung Energy & Metal Tbk, which will push Borneo's stake in ARMS to as much as 47.6 percent.
The Bakries, in turn, will buy ARMS's 29.2 percent stake in Jakarta-listed miner PT Bumi Resources using the proceeds from the ARMS stake sale and the $278 million in cash, amounting to a total of $501 million.
"I look forward to strengthening the board by adding a world-class independent non-executive director soon after the separation, and then it is over to Samin to ruthlessly cut costs in Indonesia," Nat Rothschild said in an e-mailed statement. (Reporting by Silvia Antonioli; editing by Stephen Eisenhammer and Jane Baird)
'Thanks for buying back a worthless pile of turd'
Twitter spat breaks out between warring billionaires Nat Rothschild and Aga Bakrie over coal firm split
- Mega-rich co-founders of coal mining firm Bumi split in multi-million deal
- Co-founding financier Nat Rothschild sparked fiery exchange on Twitter
- He called Aga Bakrie, member of co-founding Bakrie family, 'extremely dumb'
- Public Twitter row erupted after restructure prompted corporate divorce
By Emma Glanfield
Daily Mail
26 March 2014
A multi-million pound deal which saw coal mining firm Bumi split from its co-founder was sealed amid a flurry of explosive tweets in which warring billionaires described each other as 'dumb'.
London-based mining firm Bumi - now known as Asia Resource Minerals plc (ARMS) - has completed a long-awaited separation from its co-founders - an Indonesian family conglomerate known as the Bakrie group.
Exchange: Nat Rothschild (left) sent a message on Twitter to Aga Bakrie (right) which said: 'Thanks for buying back a worthless pile of turd'
He posted: ‘Thanks for buying back a worthless pile of turd' directly to Aga Bakrie, the son of the chairman of the Indonesian group.
It started a flurry of fiery messages between the pair, who have been bickering since the company's shareholders voted in December to split from the co-founding Bakrie family in a major restructure.
Oxford-educated financier Mr Rothschild also labelled Adika ‘Aga' Nuraga Bakrie, 32, ‘extremely dumb', during the public Twitter row which erupted after the corporate break up.
He wrote: ‘Whilst your dad is an evil genius (yes I'm paying nirwan a compliment), the word on the street is that you are extremely DUMB!'
Mr Bakrie responded to the message with: ‘Haha... "Dumb" I believe that's the word that has been associated with you by most of the people that I have met.'
Asia Resource Minerals was founded as Bumi in 2010 by the influential Bakries and financier Nat Rothschild, with the aim of giving London investors access to promising Indonesian coal assets.
Nat Rothschild sent a message on Twitter to Aga Bakrie, son of the chairman of the Indonesian conglomerate, which said: 'Thanks for buying back a worthless pile of turd'
Financer Mr Rothschild also labelled Adika 'Aga' Nuraga Bakrie 'extremely dumb', during the public Twitter row which erupted after the corporate break up
Aga Bakrie, the son of the chairman of the Indonesian-based Bakrie group, hit back at the claims and labelled Bumi co-founder Mr Rothschild 'dumb' as well
But the business suffered from boardroom rows, allegations of wrongdoing and falling coal prices. Its shares have lost almost 80 per cent of their value since the business was set up.
To revive the business's fortunes, shareholders voted in December to split from Indonesia's Bakrie family, but it took longer than expected due to difficulties of raising the necessary cash.
With the split completed, ARMS will now focus on turning around its other main Indonesian subsidiary, Berau Coal, while giving up a stake in Asia's top thermal coal exporter PT Bumi Resources.
ARMS Chief Executive Nick von Schirnding said he felt ‘vindicated'.
He said: ‘There were a number of stakeholders saying this would never happen. I can't say it has been easy, it was a complicated transaction, but to have achieved this is excellent for our shareholders.
Mr Rothschild, pictured in February last year, took to his Twitter page to take a swipe at the powerful business group after the deal was closed
‘Our focus is on our subsidiary now. We need to regain credibility and today's announcement is the first step in that direction.'
ARMS said it would now return $400 million to shareholders but did not give any timeframe and did not specify in what form the money will be returned.
Shareholders welcomed the completion of the separation but said they hoped ARMS would return closer to the $501 million it got from the deal.
Mr Rothschild said: ‘I think it's important to return the maximum amount of money because there is no appetite from the major shareholders, certainly not from me, to entrust money with the management team in London to redeploy that capital.
‘We want the business ... to be run as efficiently as possible and for all dividends to be passed through to shareholders.'