Bumi – well, well, well the Bakries look to buy back their assets from Bumi…

And so, as ever, the smoke signals from the market pressaged news (will insider trading ever be stamped out?)…

The Bakries have offered to effectively buy back their prized Bumi Resources and PT Berau Coal assets per the announcement below – 

Proposal received from shareholders

The Board of Bumi plc (“the Company”) has received a proposal from PT Bakrie

and Brothers Tbk and Long Haul Holdings Limited (collectively the “Bakrie

Group”) to cancel their indirect approximately 23.8% shareholding in the

Company, in exchange for an equivalent value of PT Bumi Resources Tbk (“Bumi

Tbk”) shares representing 10.3% of the total outstanding share capital of Bumi

Tbk as presently held through the Company. In addition, the Bakrie Group has

made a conditional proposal to buy back the remaining 18.9% shareholding in

Bumi Tbk for cash before Christmas 2012.

The Board is considering the share exchange proposal and will make a

recommendation to shareholders. It will also consider the offer to buy back the

remaining 18.9% shareholding in Bumi Tbk.

The Bakrie Group has further made a conditional proposal to make a cash offer

within the next six months for the Company’s approximately 84.7% shareholding

in PT Berau Coal Energy Tbk.

It looks like the Bakries want to keep matters private in Indonesia and not allow the damage that has already been done to their reputation to escalate. Ol Natty Rothschild and his associates have, it seems, been succesful in exerting pressure on the Bakries in order to preserve value in the acquisition by Bumi Plc that looks to have been an unbridled disaster for for him and his backers so far.

No prices are mentioned aside from the “equivalent value” statement in relation to Bumi Resources. It could be argued that the Bakries are buying back their holding at the nadir of the coal cycle but still, for Bumi Plc shareholders, the resultant value crystallisation of the entire transaction is likely to be nearer £4 than £1 as a control premium will be required and the current value of the 2 acquisitions is over 40% higher than Bumi Plc’s share price. A long way from the float of £10 of just over 12 months ago but still, if accepted it allows Bumi management to hit the reset button and look at new acquisitions.

It is also interesting that Samin Tan is remaining as shareholder – patently he sees no point in exiting his holding that he paid £11 for only 7 months ago! Looks like Tan will be kingmaker in this transaction given the 23.8% stake he has in Bumi Plc.

Things have just got even more interesting and for those that followed our lead and bought in in the last 2 days (link here – http://www.spreadbetmagazine.com/blog/2012/10/9/chart-snippet-bumi-looks-to-break-resistance-1723p.html), this mornings open is likely to provide an early Chirstmas present for you.

We expect 250p+ in the days ahead.

Editor

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