Financier Nat Rothschild on Monday night suddenly resigned as a non-executive director of Bumi, the mining group he co-founded two years ago, declaring he had "lost confidence" in the board to stand up for investors in the London-listed company.
In a sharply worded letter to Bumi chairman Samin Tan, Rothschild was critical of a proposal by the powerful Indonesian Bakrie family – co-founders in the company – to take control of mines owned by Bumi in Indonesia. "You appear determined to drive through the Bakries' proposal. 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 said in the letter.
The company issued a three-line statement announcing Rothschild's resignation and declined to comment further. There was no immediate public response from Tan to the letter.
Rothschild led the London flotation of the business two years ago, when it was known as Vallar. It was a £700m cash vehicle intended to make acquisitions in the mining industry and was renamed Bumi after taking a 29% stake in the mining business controlled by the Bakrie family in Indonesia.
Its shares crashed last month by a quarter when the London-listed company said it was investigating "potential financial and other irregularities" at the Indonesian operations. Bumi plc also has an 85% stake in the Berau coal mines in Indonesia.
The shares, which were floated at £10, ended at 280p on Monday night. The market was closed before Rothschild's resignation was known.
The Bakries have issued a proposal that effectively allows them to buy back the mines in their native Indonesia from Bumi in London, leaving the company back at square one as a cash shell.
Rothschild, who had been co-chairman of the company until a row with the Indonesian investors, is now intending to try to fight the proposals by the Bakrie family "from outside the tent". He said it would be a "disgrace" to back the offer from the Bakries because of the alleged irregularities that are currently being investigated.
"It is a matter of great regret for me that I was a party, with our advisers, to bringing the Bakries to London. As someone who loves Indonesia, it is also a matter of profound unhappiness that you and they have done such damage to Indonesia's reputation internationally," Rothschild said.
He said the affair was damaging potential investment in Indonesia. "The Bumi plc story is a small but high-profile impediment to ensuring [economic] growth, especially when resource nationalism is repeatedly used to abuse minority shareholder rights. I am determined to fight for my fellow investors and can do that better from outside the tent," he said.
Christopher Fong, Bakrie group senior vice president, told Reuters: "What a disappointment Mr Nat Rothschild has been to us and all shareholders … and now he has the audacity to say we have disgraced Indonesia."
Fong said Rothschild should return all shares and other benefits received as commission for the venture.
Tan became chairman last year after buying half of the 47% stake that the Bakries owned in Bumi, leaving the Bakries with 23%. Rothschild owns 11% of the shares while Rosan Roeslani, chief executive of the Berau coal mines, has about 13% of the shares.
The complex offer that the board of Bumi has received from the Bakrie family would cancel their 23% shareholding in the London-listed company in return for about a third of the company's stake in the Indonesian mines.
The remainder of the 29% stake would be bought in cash before Christmas, while in the "next six months" the company's 85% stake in Berau would also be acquired.