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Rothschild delivers ultimatum to senior Bumi director

by Sarah Miloudi on Jan 07, 2013 at 07:39

Rothschild delivers ultimatum to senior Bumi director

Nat Rothschild has delivered an ultimatum to one of Bumi's senior independent directors, asking the scandal-hit firm to up its response against allegations of financial irregularity or consider quitting the board.

Rothschild, who founded London-listed Bumi in 2010 and holds 15% of its votes, sent an email to director Sir Julian Hornsmith outlining his views, telling him 'you will appreciate these issues demand much more than the placatory response I have received from you so far, and I would sadly ask you to consider your suitability to continue in the role of senior independent director.'

Since its £10 per share float some two years ago, Rothschild, who created the resources firm alongside Indonesia's Bakrie family, has seen the company shed more than 70% of its value. Shareholders like BlackRock's Evy Hambro have trimmed back their positions, and Rothshild quit his role as a non-executive director as it emerged the Bakries were to unravel their 47.6% position at a significant profit.

Rothshild's email, seen by the Daily Telegraph, is expected to be followed up with an extraordinary general meeting aimed to up the pressure on Bumi's board.

However in a trading update for Bumi Plc, the issues surrounding its board and accusations of financial irregularity were not touched on, though the firm's chief executive said it had a clear-near-term strategy of separating itself from Bumi Resources, its strife-hit division.

Bumi Plc outlinined a major review of its capital expenditure programme and the company also acknowledged it had been impacted by 'weak' coal prices, causing its expected selling price for 2012 to drop to $70.0/t compared to $81.4/t for 2011.

In a previous report, Bumi posted a $655 million net loss for the nine months ended 30 September.

Nick von Schirnding, Bumi Plc's chief executive officer, said: 'Our near term strategy is very clear: to effect a separation from Bumi
Resources and to maximise value in our operating subsidiary, Berau.

'We have taken immediate steps to mitigate the on-going impact of lower coal prices by adjusting the mine plan for Berau, targeting lower stripping ratios and reducing hauling distances. Expansion must be profitable and sustainable and we believe that the conditions are not right for the c$288m proposed overland conveyor and power plant projects at Binungan to proceed at this juncture. These projects will be revisited as market fundamentals start to improve. In the meantime we will focus on further initiatives to drive down our cost base and ensure we have optimal operating management in place across our business.'

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