Financier Nat Rothschild is in talks with Indonesian investors, including a contender for the country's presidency, on a plan to counter a $1.4 billion Bumi Plc buyout proposal from the influential Bakrie family, sources said.

Rothschild set up Bumi with the Bakries two years ago, when the politically connected family injected Indonesian coal assets into a London investment shell created by the financier. But their ties have since soured, sparking confrontations over corporate governance and management while coal prices tumble and shares slump.

Tensions culminated last month when the Bakries announced plans to unwind the venture and Rothschild resigned from Bumi's board.

Sources with direct knowledge of the matter said Rothschild was now in discussions with various partners including former general and current presidential candidate, Prabowo Subianto, to thwart the Bakrie aim of regaining full control of their thermal coal empire and dismantling London-listed Bumi Plc.

The sources would not say in what capacity Prabowo, the former son-in-law of ex-Indonesian President Suharto, was involved. Calls to Prabowo's cell phone were not returned.

"(They) are looking to find an alternative solution (for shareholders)," said one of the sources, declining to be identified because the information was private.

Another source said the plan would aim to effectively keep Bumi Plc alive, without the Bakrie family and associated shareholders.

The sources said details of the plan were still being hammered out, as there was some disagreement within the consortium on how to structure the proposal.

A spokesman for Nat Rothschild declined to comment.

BATTLE FOR BERAU

The Bakrie Group, led by family patron Aburizal Bakrie who is also a candidate for the 2014 election, said last month it planned to draw a line under the ill-fated London venture and take back operating assets now held by Bumi - coal miners Bumi Resources and Berau Coal Energy.

The Bakrie plan has three stages: swapping their Bumi Plc shares for part of the 29 percent of Bumi Resources held by the London-listed company; acquiring the rest of the stake for cash; and then eventually buying Bumi Plc's 85 percent stake in Berau.

The sources said the Bakries' influence over Bumi Resources, the jewel in the Bakrie coal empire, and the fact there was only a minority share at stake, should allow the family to take back that asset. It is also the easiest exit for the Bakries - something all sides agree is now inevitable, the sources said.

The battle instead is expected to be fought over Berau, Indonesia's fourth-largest coal miner, given the relative lack of influence the Bakries have there.

The Bakrie family has offered to buy Bumi Plc's stake in Berau, with sources citing a price tag of around $950 million.

Shares in Berau jumped on news of a potential counter-proposal to the Bakrie plan, and hopes of Bumi's survival also lifted that battered stock, up 7 percent.

Bumi's share price plunged by more than 80 percent this year, though it has steadily risen since the breakup proposal.

"This could be a tough and long battle for both parties to buy Berau," Fadlul Imansyah, head of equities at CIMB Asset Management, an investment fund based in Jakarta.

"Rothschild has a good eye in picking a partner who is at the same level (as Bakrie). Prabowo could help seal the deal. Fund-wise, it shouldn't be a problem."

INQUIRY

Nat Rothschild's relationship with the Bakries hit a low point last month, after news of an inquiry into possible financial wrongdoing strained their already tense relations.

A formal counter proposal would not come until the independent inquiry is completed, one of the sources said, adding that could take months, with an additional Indonesian probe potentially slowing proceedings.

Though still heavily in debt, the Bakrie Group is aiming to get the coal mining assets back under the family's roof. The conglomerate has businesses spanning from agriculture to banking to real estate.

Aburizal Bakrie, the eldest child of the late Achmad Bakrie, was the chairman of the group until 2004, when he became Indonesia's Coordinating Minister for Economy.

In 2009, he was elected as the chairman of the Golkar Party, which was defeated at the last election by the Democratic Party. Prabowo, a candidate of the Gerindra party, has led in recent opinion polls ahead of the 2014 election.

(Reporting by Stephen Aldred in HONG Kong, Clara Ferreira-Marques in LONDON and Janeman Latul in JAKARTA; Additional reporting by Matthew Bigg and Andjarsari Paramaditha in JAKARTA; Editing by Michael Flaherty and Ryan Woo)