Rothschild In £160m Share Bust-Up
Nat Rothschild, the billionaire financier, is facing demands to relinquish shares potentially worth tens of millions of pounds in an Indonesian coal venture as its owners hurtle towards a messy divorce.
Mr Rothschild, the tycoon who founded Bumi plc through a vehicle called Vallar in 2011, is under pressure to return just over 16m shares alongside Tom Daniel, his cousin, who was also involved in establishing the venture.
The demand was made by Indonesia's Bakrie family as part of a complex proposal to unwind an alliance that has caused fury among City institutions and threatened to inflict damage on London's reputation for high corporate governance standards.
In an offer letter seen by Sky News, the Bakries' vehicle, Long Haul Holdings, urged Mr Rothschild to hand over stock worth an enormous sum of money for the benefit of independent shareholders.
"The Bakrie Group will expect that the Founders (Nathaniel Rothschild and others) return 16,064,000 ordinary shares of the Company to the Company for cancellation, given that these shares were awarded to the Founders in return for a transaction which is now being unwound. Also, the Company and the Founders shall agree to cancel the C-share arrangement," the letter said.
I have also learned that the directors of Bumi plc plan to appoint an investment bank later today to provide independent advice on the proposed transaction.
People close to Mr Rothschild poured cold water on the idea that the Bakries would buy Bumi's operating assets or that he would agree to the request to relinquish his shares.
At the time of Vallar's listing, the shares were priced at £10m, giving the founders' shares a value of more than £160m.
"There is no love lost between the Bakries and the Rothschilds," a source close to the situation said today.
The row offers a different dimension to the perennial debate about mega-bonuses in the City, but risk adding fuel to the argument that a cosy club of financiers stand to earn vast rewards without generating any broader incremental economic benefit.
Mr Rothschild, a member of the banking dynasty, has been a prominent figure in the media in recent years owing to his association with politicians including George Osborne, the Chancellor, and Lord Mandelson, the former Business Secretary.
For a sense of how complicated the structure of the proposed transaction is, this is Bumi's statement to the stock exchange made earlier today:
"The Board of Bumi plc ("the Company") has received a proposal from PT Bakrie and Brothers Tbk and Long Haul Holdings Limited (collectively the "Bakrie Group") to cancel their indirect approximately 23.8% shareholding in the Company, in exchange for an equivalent value of PT Bumi Resources Tbk ("Bumi Tbk") shares representing 10.3% of the total outstanding share capital of Bumi Tbk as presently held through the Company. In addition, the Bakrie Group has made a conditional proposal to buy back the remaining 18.9% shareholding in Bumi Tbk for cash before Christmas 2012.
The Board is considering the share exchange proposal and will make a recommendation to shareholders. It will also consider the offer to buy back the remaining 18.9% shareholding in Bumi Tbk. The Bakrie Group has further made a conditional proposal to make a cash offer within the next six months for the Company's approximately 84.7% shareholding in PT Berau Coal Energy Tbk."
Bumi's shares were trading up more than 30 per cent today, underlining investor expectations that they will recover much of the value lost since the original Bumi deal.
A spokesman for Mr Rothschild declined to comment.