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Buxton on Bumi: the deal is not acceptable
by Emma Dunkley on Oct 18, 2012 at 14:44
Schroders' Richard Buxton has criticised the Bakrie family’s proposal to buy back their assets from troubled mining company Bumi, although he has warned the investigation into the firm’s alleged financial impropriety could thwart their plans.
The head of UK equities at Schroders and manager of the Schroder UK Alpha Plus fund, a Citywire Selection pick, exclusively told Wealth Manager he was ‘surprised’ when Bumi did the initial Indonesian coal deal with the Bakries a couple of years ago.
The Bakrie family sold a stake in the country’s largest coal exporter into the original deal back in 2010, and has proposed to buy back the assets in a move that would end their ties with the mining group.
The offer is being proposed by the brothers in light of ‘the trading performance of the company’s shares and the irreconcilable differences between the original promoters of the company and the current major shareholders of the groups…’, they said in a letter to the independent directors of London-based Bumi.
Buxton, who owned 2% of the firm, said: ‘Them attempting to buy it all back as coal prices are significantly lower [than] before the deal was done is not acceptable.'
However, the board of Bumi is investigating claims made in a dossier sent to the non-executive directors by a whistle-blower alleging financial impropriety at its main affiliate, PT Bumi Resources, in which Bumi has a stake. The investigation is likely to be completed by the end of this month.
‘If the investigation results are made public, it could be difficult for the Bakries to carry out their proposal,’ said Buxton (pictured).
‘It’s a question of timing for the Bakrie proposal, to buy it back before the investigation becomes public.’
Buxton’s comments come after Nathaniel Rothschild resigned from the board of Bumi after the offer from the Bakries to cut ties with the company, and after BlackRock's Evy Hambro sold 10 million Bumi shares.
In a letter to Bumi’s chairman Samin Tan, Rothschild said the proposal is obviously not in the interests of minority shareholders and he therefore finds it impossible to stay on as a director.
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