Nat Rothschild, the financier and descendant of the famous banking family, yesterday highlighted one of the market's higher-risk buying opportunities within a resignation letter to the chairman of Bumi
Rothschild said existing Bumi shareholders could see "an estimated return of £4.30 a share," which compares to the current Bumi share price of £2.55.
Rothschild's tip-off was accompanied by criticism of Bumi's board following a complicated offer for the group by the Bakries, the Indonesian family that controls the coal mining operation in which Bumi has a 29% stake.
The offer was preceded by a statement last month from Bumi that it had become aware of "allegations concerning, among other matters, potential financial and other irregularities in the Company's Indonesian operations."
Rothschild explained yesterday:
Given the scale of the alleged irregularities, as well as other facts not yet in the public domain, it would be a disgrace to proceed with, or even to entertain, the proposal made by the Bakries last Wednesday, October 10.
Based on news reports and other sources, it appears that you shall be reimbursed for your investment at a price of £10.91 a share, while other investors see an estimated return of just £4.30 a share. This is a clear breach of the spirit and, I believe, the letter of the takeover code.
Rothschild added: "I believe that this proposal is so obviously not in the interests of minority shareholders that I find it impossible to stay on as a Director. I am afraid that I have lost confidence in the ability of the PLC Board to stand up for investors."
Rothschild had led the London listing of the business two years ago, via a cash vehicle known as Vallar that floated at £10 a share. He said today that he was "determined to fight for my fellow investors and can do that better from outside the tent."
He may have a tough fight, however, as the Bakrie family owns 23% of Bumi, while chairman Samin Tan owns a further 23% and a senior manager owns 13%. Rothschild owns 11%. Bumi's market cap is £461 million.
For brave investors, the chance of receiving £4.30 a share from a £2.55 investment may seem attractive -- but a potential 69% gain is dependent on Rothschild's "news reports and other sources" having provided accurate figures.
In addition, any return is dependent on the Bakrie family, who -- at least according to Rothschild -- may not be the most reliable of buyers.
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