Wall Street Bank Aids Rothschild Coal Fight
The financier Nat Rothschild has strengthened his armoury in the battle over two vast Indonesian coal assets by hiring Morgan Stanley, the Wall Street bank, to act for him in one of the City's bitterest fights for years.
Mr Rothschild, who has earned hundreds of millions of pounds by listing natural resources acquisition vehicles on the London Stock Exchange, is in discussions with a group of existing and potential investors about a counter-proposal that would see Bumi plc remain as a public company.
His move follows a complex offer made by Indonesia's Bakrie family last month that would leave independent shareholders in Bumi nursing huge losses.
I understand that Morgan Stanley is working on the principles of a counter-offer that would involve the provision of new funds to acquire the Bakries' stake in Bumi.
People familiar with Mr Rothschild's plans said he would seek to overhaul corporate governance at the company following a row at Bumi which has threatened to further cloud the City's reputation for robust financial supervision.
Mr Rothschild's plan to recruit new investors has involved talks with the brother of Prabowo Subianto, a candidate for the Indonesian presidency and son-in-law of President Suharto, the former dictator whose repressive regime was accused of frequent human rights abuses. Suharto was ousted in 1998 and died in 2008.
General Subianto is barred from entering the US and has previously complained about being denied a US visa.
Morgan Stanley's alignment with Mr Rothschild is significant because many of the world's largest investment banks already have roles in the Bumi fight which would prevent them working for the financier.
The Bakries, one of Indonesia's most important business dynasties, tabled a $1.4bn (£ offer for Bumi which would involve them taking control of two large coal assets, Bumi Resources and Berau Coal Energy.
Mr Rothschild's plan would not see him acquire the assets outright but retain Bumi as listed company in which he would continue to own a minority stake, according to people close to him.
Mr Rothschild quit Bumi's board last month following threats from a number of other directors - both connected to the Bakries and independent - to resign if he did not. It is unclear whether Mr Rothschild will seek to rejoin the board if his proposals are voted through.
The Bakries have also demanded that Mr Rothschild surrender tens of millions of pounds-worth of 'founders' shares', a demand that he is resisting on the basis that Bumi would not be dismantled or liquidated under his proposal.
Morgan Stanley and a spokesman for Mr Rothschild both declined to comment.