Troubled coal miner Bumi holds crucial board meeting

SINGAPORE, Oct 11 (Reuters) - The directors of troubled BumiPlc , one of the world's largest thermal coalexporters, hold a board meeting on Thursday as the future of thecompany created by British financier Nat Rothschild andIndonesia's Bakrie family hangs in the balance.

Allegations of impropriety, against a background of weakcoal prices and tumbling shares, have strained already frayedrelations between major investors in the London venture andfuelled speculation of a potential split.

The relationship between Rothschild and the Bakries, one ofIndonesia's most powerful and politically-connected families,has soured over the past year, particularly after a leakedletter from the financier last November that called for a"radical clean-up". Rothschild was removed as co-chairman monthslater.

Relations have also frayed between the Bakries andIndonesian tycoon Samin Tan, who pulled the Bakries back fromdefault last year with a $1 billion investment, only to watchthe value of his shares crumble.

The Bakries and Tan each hold half of a 47.6 percent stakein Bumi Plc, while Rothschild owns 12 percent.

Sources have said Tan is "furious" with the Bakries afterwatching the value of his investment plunge -- the shares hebought are worth 9 times less than the level at which he camein.

The board meeting is in Singapore, and is the firstgathering since an inquiry into potential wrongdoing at thegroup's Indonesian operations was announced last month.

The independent probe, being led by a London law firm andstill in progress, has revived worries over governance at BumiPlc and concerns over the woes of its debt-burdened affiliate,PT Bumi Resources , the jewel in the Bakrie empire.

Heightening tensions before the Singapore meeting, theBakries said on Wednesday that telephones and e-mail accountsbelonging to the family and its group of companies had beenhacked, pointing to unspecified "suspicions" over who to blame.The incident has been reported to Indonesian police.

Most of the allegations of impropriety, expected to totalmore than $500 million, relate to Bumi Resources, the flagshipBakrie miner and Indonesia's largest coal producer. Two of threeinvestments at the centre of the probe, though, have alreadybeen written down to zero by the London parent.

"While we are not able to quantify the amounts involved inthese irregularities, we believe this investigation mayreinforce the idea that the company needs to address its complexcorporate structure," analysts at JP Morgan, the bank thatfostered the creation of Bumi, said in a note last month.


Sources familiar with the matter said Thursday's boardmeeting was a scheduled gathering, with a long-planned to-dolist - but top of the agenda will be progress made by lawyers ontheir probe, which could run into next month.

The meeting of the board members, 16 after the resignationof former CEO Ari Hudaya, is expected to include Chairman SaminTan, co-Chairman Indra Bakrie and Rothschild, and is thereforeunlikely to escape discussion on the future of the group.

At least one of the sources, though, said no restructuringcould be decided before the full investigation was completed.

Bumi Plc has long said it would like to bring together BumiResources, in which it owns 29 percent, and coal miner Berau, inwhich it owns 85 percent, into a single operating holding.

But options being considered by teams of advisers courtingBumi in recent weeks include more radical solutions, such as adivorce of Bumi Resources from the group.

Bumi Plc's board could also seek to replace Hudaya, who waschief executive until March and is still chief executive of BumiResources.

Two sources also said they could not exclude other changes.

(Reporting by Janeman Latul and Clara Ferreira-Marques inLONDON; Editing by Raju Gopalakrishnan)


Keywords: BUMI/