By Alex MacDonald
LONDON--U.K.-listed Indonesian coal miner Bumi PLC (BUMI.LN) said Friday that its co-chairman Indra Bakrie has resigned with immediate effect, marking the third director to leave the company since a probe was launched into alleged financial and other irregularities at the company's Indonesian assets.
In his letter to the Bumi board of directors, Mr. Bakrie said it was appropriate for him to resign from Bumi's board after the Bakrie Group, a large conglomerate owned by the powerful Indonesian Barkie family, submitted a proposal to Bumi's board to exit its 23.8% stake in the London-listed miner and buy back all of Bumi's Indonesian coal assets in the process for around $1.2 billion in cash.
The resignation comes ahead of Bumi's London board meeting on Wednesday in which board members are likely to discuss the Bakrie proposal after reviewing reports from U.K.-based law firm Macfarlanes and investment bank Rothschild Group on the probe and the fair value of the proposal, respectively. A person familiar with the matter said the board was unlikely to make a formal recommendation regarding the Bakrie proposal, but he didn't rule out the possibility.
Macfarlanes is conducting an independent probe into alleged financial irregularities largely focused on about $600 million in development funds at Indonesia's largest coal miner, PT Bumi Resources TBk (BUMI.JK), in which Bumi PLC owns a 29% stake, while the Rothschild Group is carrying out fairness opinions on any proposals made to the board.
So far, the board has received one proposal from the Bakrie family and a letter suggesting an alternative proposal from a consortium led by European financier and Bumi PLC co-founder Nathaniel Rothschild, who isn't affiliated with the bank that bears his family name.
The Bakrie family made a proposal almost two months ago in which they offered to sever their ties with Bumi PLC via three transactions after a chequered history of boardroom spats regarding corporate governance and the probe launch, which caused the company's shares to plummet.
The first Bakrie transaction involves the Bakrie family giving up its 23.8% stake in Bumi PLC for 10.3% of Bumi Resources. The Bakrie family would then pay $278 million in a second transaction to buy out Bumi PLC's remaining 18.9% stake in Bumi Resources. In a third transaction, the Bakrie family has offered to buy out Bumi's remaining asset, an 85% stake in Indonesian coal producer PT Berau Coal Energy TK (BRAU.JK) for about $950 million sometime next year, although analysts question how the debt-laden family would be able to raise the funds for such a deal.
Mr. Rothschild, who stepped down from Bumi's board two months ago due to co-chairman Tamin San's inclination to accept the Bakrie proposal, has also put forward an alternative proposal, which involves accepting the Bakrie family's first two proposals but not the third. The Rothschild proposal would also inject $270 million into the company via a consortium of investors to remove Mr. Tan and another large Bumi PLC shareholder, Rosan Perkasa Roeslani, from the board and Bumi's shareholding.
The first director to leave was Ari Hudaya, president director of Bumi Resources, who stepped down immediately after the independent probe was launched into his company.
Write to Alex MacDonald at firstname.lastname@example.org
Subscribe to WSJ: http://online.wsj.com?mod=djnwires