Rothschild to sell out of ARMS as Asian bidder closes in on deal
LONDON June 8 (Reuters) - Financier Nathaniel Rothschild will abandon
his troubled investment in Indonesia's coal industry, he said on Monday,
agreeing to sell his stake in Asia Resource Minerals (ARMS) after
securing an improved offer from an Asian bidder.
Rothschild, the scion of the banking dynasty, co-founded one of ARMS'
predecessor companies in 2010 and teamed up with Indonesia's
politically-connected Bakrie family, aiming to tap demand from the
southeast Asian country's infrastructure plans.
However, hit by tumbled coal prices, a series of boardroom disputes and
allegations of fraud and corruption, shares in the business -- known as
Bumi from 2011 -- plunged about 90 percent.
More recently, and after the firm was reinvented as ARMS in late 2013,
Rothschild has been battling for control of the business with Asian
group Coal Energy Ventures (ACE), a vehicle backed by hedge fund Argyle
Street Management and funded by Indonesian business conglomerate Sinar Mas.
On Monday, Rothschild said he had agreed to sell his 17.2 percent stake
in ARMS to ACE, after the latter raised its offer to 56 pence per share
in cash from 41 pence previously. That values the whole of ARMS at more
than $200 million.
ARMS traces its roots to Vallar, an investment vehicle Rothschild helped
to set up in 2010 and which raised over 700 million pounds ($1.1
billion) in an initial public offering. Rothschild and other members of
the management team at that time invested about 100 million pounds in
the business.
"There is no suggestion that this is a good outcome for shareholders,
but it is the best short-term outcome given the difficulties that ARMS
would have faced..." Rothschild said on Monday.
"Investors like myself who believe in the long term future of thermal
coal, will now be given the opportunity to re-deploy their capital back
into the sector, but this will be our first and last investment in
Indonesia's coal sector".
Rothschild said last month he was no longer considering a rival bid for
ARMS together with Russian partner SUEK.
Sinar Mas has stressed to investors that, as an Indonesian-owned
company, it was well placed to take advantage of the country's push for
more local ownership of natural resources.
"We have had to up the offer but Rothschild will exit the company ... so
I think it's a good milestone," said Fuganto Widjaja, the head of the
Sinar Mas business involved in the bid.
"It will probably make it much smoother from now on. Maybe in a month or
two it will close and hopefully it will be a success."
ARMS is currently also tangled in a dispute with its former CEO and
president of its Berau subsidiary Amir Sambodo, who was removed by
shareholders in March but refuses to vacate his position.
($1 = 0.6568 pounds) (Additional reporting by Aastha Agnihotri in
Bengaluru and Fergus Jensen in Nusa Dua; Editing by Gopakumar Warrier,
Susan Thomas and Mark Potter)