Nat Rothschild Fights Samin Tan’s Bid to Gain Control of ARMS


JANUARY 13, 2015

Jakarta. Nathaniel Rothschild is fighting former Asia Resource Minerals chairman Samin Tan’s move to grab control as the Indonesian coal miner struggles to avoid defaulting on $450 million of debt.

ARMS, owned 17.5 percent by Rothschild, said last week it may fail to repay if shareholders approve Tan’s proposal to remove three directors including chief executive Amir Sambodo and appoint four nominees of his own. ARMS has asked shareholders to reject Tan’s requests in a vote to be held on Feb. 4.

Rothschild said he expects shareholders to vote against the proposal because the move would raise concerns among bondholders.

Tan lost half his voting rights in ARMS to Austria’s Raiffeisen Bank International in October after he failed to meet the terms of a $224 million loan he took in 2013 to purchase the stake.

The bank and Tan each control voting rights for about 23.8 percent.

“It appears that Raiffaisen have no interest in supporting a series of resolutions that would transfer control of the company away from a board and CEO that are making massive strides to turn the business around,” Rothschild said in a phone interview.

Bumi, which owns 85 percent of Berau Coal Energy, changed its name to Asia Resource Minerals last year.

The conversion followed a $501 million deal to sever ties to Indonesia’s Bakrie family almost two years after the venture with Rothschild began to sour.

Raiffeisen is closely following “the developments at the company and will make its decision as secured lender, when requested,” spokesman Michael Lehotzki said in an e-mail.

ARMS, which is seeking to extend the maturity of the bonds due in July, said a failure would lead to default, and possible suspension of trading and the loss of its premium listing in London. It also has $500 million of 7.5 percent bonds due in March 2017.

Rothschild in November proposed to raise funds selling shares to refinance the company’s $950 million of debt and reduce its interest bill. He’s ready to underwrite the sale, he said. The company needs to win the consent of the bondholders to extend the maturity, he said.

“Tan never wanted to work consensually with bondholders,” Rothschild said. “He has no economic alignment with shareholders because his equity is completely pledged to two banks; Standard Chartered and Raiffeisen.”

Tan took on about $1 billion in debt through a loan from Standard Chartered to fund his initial purchase of a 23.8 percent holding in ARMS in January 2012 and bought a second stake from the Bakries under the separation deal in 2013. Tan didn’t pick up a call to his mobile phone seeking comment.

Tan, through his Borneo Bumi Energi & Metal, on Dec. 22 requested a meeting of shareholders to remove Sambodo along with two other directors, while appointing several new directors. ARMS was scheduled to announce on Tuesday the date of the general meeting expected early next month.