Bumi Plc, the London-listed Indonesian coal mining group riven by a shareholder dispute urged investors on Tuesday to reject British financier Nat Rothschild's proposal to replace the board and back its own plan for peace instead.
Rothschild, who is locked in a bitter corporate governance battle with Bumi Plc's co-founders, Indonesia's influential Bakrie family, wants to remove at least 12 of the 14 current directors and bring in a new board including himself.
Shareholders are due to vote on Rothschild's proposals at a special meeting in London on February 21.
(Read More: Nat Rothschild Hits Out at Bumi CEO and Board)
Underlining its opposition to the proposals, the board also announced on Tuesday the appointment of Eko Budianto to head Bumi Plc's 85 percent-owned business Berau Coal Energy, an appointment opposed by Rothschild.
Chief Executive Nick von Schirnding said the Bumi Plc board was unanimous in its view that Rothschild's plan would lead to a stalemate, continued shareholder disputes and further value destruction.
Instead the board wants to pursue a recovery plan starting with a divorce from the Bakrie Group under a "separation proposal" which would see Bakrie selling its direct 23.8 percent stake in Bumi Plc in return for $278 million in cash and Bumi Plc's 29 percent stake in PT Bumi Resources.
This would leave Bumi Plc to focus on its majority-controlled Indonesian business, Berau Coal.
Von Schirnding said the separation proposal was currently worth more than $580 million, including the $278 million in cash.
"That value is trickling away over time," he told reporters on Tuesday.
(Read More: Troubled Miner Bumi to Revamp Name)
"The longer we prolong the in-fighting the less value will remain for other shareholders."
For his part, Rothschild said that the Bakries would still retain influence over the company if the separation proposal went ahead because existing board members, such as chairman Samin Tan, are linked to the family.
"Bumi is like a football team that's lost 20 matches in a row. It's not going to start winning until it changes its manager and its captain," said Wal King, who Rothschild wants as the firm's new chairman.
Shares in Bumi were up 1 percent at 348 pence in late trading on Tuesday.
Analysts at Nomura said the Bumi management's proposals were a positive step and showed it was taking the task of cleaning up the group seriously, but uncertainty remained.
"(They) are attempting to offer an alternative to Rothschild's shareholder activism but the board will need to make it through the EGM (extraordinary general meeting) for them to be able to deliver on their vision," the analysts said.
The outcome of next month's shareholder meeting is by no means certain. Last month, former Berau Coal head and Bumi investor Rosan Roeslani resigned from Bumi Plc's board after UK regulators ruled he had acted in concert with the
Bakries as a 20.4 percent shareholder and that henceforth the total voting power of the Bakries camp would be capped at 29.9 percent.
The ruling gives greater weight to the votes of other shareholders with Rothschild now having an effective 18.2 percent, although his economic interest is about 11 percent, according to Thomson Reuters data.
Rothschild also has the public backing of some top institutional shareholders including Schroders and Taube, Hodson and Stonex Partners.
The Bakries and Rothschild got together in 2010 to bring promising Indonesian coal assets to the London market by reversing them into Vallar,
Rothschild's listed investment vehicle, and renaming it Bumi Plc.
But the share price has plunged by 70 percent, not helped by falling coal prices, an investigation into allegations of financial wrongdoing and the shareholder battles.
The Bakries said last year they planned to unwind their interests in the company, drawing a line under their London listing adventure and taking back the assets they and partners such as Roeslani brought to Bumi Plc.
(Read More: Bumi Says Indonesia Probe Fails to Prove Misconduct)
Von Schirnding said if Rothschild's resolutions were passed the Bakries would block the deal to separate the Bakrie Group and Bumi Resources, and they could enforce their right to appoint the chairman, chief executive and finance director of Bumi.
"We would like to make it categorically clear that if Nat Rothschild's proposal to replace the current board succeeds then we will not proceed with our proposed separation from Bumi," the Bakries said in a statement later on Tuesday.
The resulting legal dispute could take months, if not years, to resolve, Schirnding said, destroying further value for shareholders.
"My intention here is very clear; I want to move this company out of the mess it is today," he said.
He confirmed that Budianto would replace Roeslani at the helm of Berau, and Tony Redman, a former technical director at Anglo American, had been appointed as consultant technical adviser.
The group also said that the two directors who Rothschild has said should stay on the board, Steven Shapiro and Graham Hearne, do not support his proposals and will resign if the proposals are passed by shareholders next month.