Nat Rothschild’s controversial five-year foray into Indonesia’s coal sector has come to an end after the financier’s investment vehicle, NRH Holdings, agreed to sell its 17.2 per cent stake in Asia Resource Minerals, the London-listed company formerly known as Bumi.
NR Holdings said on Monday it was selling to Asia Coal Energy Ventures (ACE), a consortium led by Indonesia’s Widjaja family — owners of the Sinar Mas conglomerate — for 56p a share, or £23.2m.
The price represents a 36 per cent premium on ACE’s original offer of 41p made on May 7 and a 52 per cent premium on Asia Resource’s closing share price of 36.75p on Friday. It values the company at £286m.
Mr Rothschild said this would “be our first and last investment in Indonesia’s coal sector”.
“There is no suggestion that this is a good outcome for shareholders, but it is the best short-term outcome given the difficulties that Asia Resource would have faced had it attempted to recover, via a lengthy and costly litigation process, the $173m that was misappropriated by the former Indonesian controlling shareholders and management of this company,” he said.
Mr Rothschild declined to say how much he lost since first doing a deal with Indonesia’s Bakrie family in 2010 to create Bumi, but people familiar with the deal estimate the figure at £80m.
NR Holdings said in a statement that equity investors will have recouped nearly $700m since June 2014 and bond holders “should see their entire $950m investment safeguarded”.
In February, Mr Rothschild had tried to retain a significant role in the company, whose main asset is Indonesia’s fifth largest coal miner Berau Coal Energy, by offering to make a $100m equity injection.
ACE, which includes Hong Kong hedge fund Argyle Street Management — already an Asia Resource shareholder — countered with its offer on May 7. It included both buying equity and a promise to reduce the company’s net debt, which stood at $578m on December 31.
There is no suggestion that this is a good outcome for shareholders– Nat Rothschild
Mr Rothschild’s investment began with great fanfare in November 2010 when his investment vehicle Vallar, which had raised £700m in a London listing, announced it was buying stakes in two major Indonesian coal companies, Berau and the much bigger Bumi Resources — which was controlled by the Southeast Asian country’s Bakrie family.
The company was renamed Bumi Plc and the share price initially jumped from £10 to £14.
In 2012, Bumi first announced it was aware of allegations of financial irregularities in its Indonesian operations. With the company’s value sinking, Mr Rothschild resigned from Bumi’s board later that year, setting the stage for a battle involving him, the Bakries and their allies — and some of the City grandees in the company’s boardroom.
Mr Rothschild failed in his attempt to unseat the board in 2013 but remained a substantial shareholder. Bumi’s shares were suspended for two months in 2013 as concerns grew over its accounts, with some $200m of “unauthorised” spending at its Indonesian units. A Bakrie ally, Rosan Roeslani, later agreed to pay $173m back to the company.
A formal split from the Bakrie group was engineered in 2014 — and the company renamed Asia Resource Minerals — as another Indonesian businessman, Samin Tan, acquired their stake in the company. But the ructions over the company’s governance continued and its financial state grew more parlous amid a sinking coal price and a failed attempt to refinance a bond issue.
Austria’s Raiffeisen Bank International took control of 23.8 per cent of voting rights in the miner last November from Mr Tan, citing the terms of a loan deal with the Indonesian businessman.