Financier Nat Rothschild is forming a rival consortium, including a contender for Indonesia's presidency, to launch a counter-offer to the $1.4 billion Bumi Plc buyout proposal from the Bakrie family, in a deal that would pour fuel on an already smoldering relationship.
Sources familiar with the matter said Rothschild - who set up Bumi with the Bakries two years ago - was in talks with various partners including former general and current presidential candidate, Prabowo Subianto, to thwart the Bakrie plan and take control of parts of the coal empire.
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The sources, who declined to be identified because the information was confidential, 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.
The Bakrie Group, led by family patron Aburizal Bakrie who is also a candidate for the 2014 election, said last month it planned to quit the Bumi venture and dismantle the company by buying back its stakes in two main operating assets - 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 Bakries injected the mining assets into Bumi Plc two years ago to help co-found the London-listed company with Rothschild. The two sides have since fallen out following boardroom rows, a drop in coal prices and a collapse of the company's shares.
Sources said the Bakries' existing shares in Bumi Resources should allow them to take back the coal asset. The battle instead is expected to be fought over Berau, Indonesia's fourth-largest coal miner, given the lack of influence the Bakries have over that business.
The Bakrie family has offered to buy Bumi Plc's stake in Berau, according to company filings, with sources citing a price tag of around $950 million. No details have emerged since the Bakries made the Berau offer.
The Bakries' Bumi buyout plan was unveiled last month when the relationship between the family and Rothschild fell apart.
The financier resigned from Bumi and the Bakries later released their buyback proposal, in what looked to be a resolution to dissolve the mess and walk away.
But the Rothschild consortium would offer an alternative to that plan - details of which remain fluid, sources said - and allow the financier to get his hands back on some of the coal assets he desired. A spokesman for Nat Rothschild declined to comment.
Bumi's share price plunged by more than 80 percent this year, though it has steadily risen since the breakup proposal.
Nat Rothschild's relationship with the Bakries hit a low point last month, when he officially stepped down from the board of Bumi Plc, after news of an inquiry into possible financial wrongdoing strained their already tense relations.
A formal Rothschild counter-bid for the Bumi assets is expected to wait until the inquiry is completed, one of the sources said.
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.
(Additional reporting by Clara Ferreira-Marques in London and Matthew Bigg in Jakarta; Editing by Michael Flaherty and Ryan Woo)