Hadiputrano, Hadinoto & Partners, Soemadipradja & Taher, Holman Fenwick Willan and Freshfields have advised on a landmark cash and share swap tri-merger involving three public-listed companies. The deal has created one of the biggest global players in coal and has led to the first-ever listing of an Indonesian coal miner on the LSE main board.
From start to finish, this mammoth deal was inked in little over three weeks – “incredibly quickly” for a deal of this size and complexity, according to HFW lead partner Alistair Duffield.
The deal is expected to close on 8 April 2011.
“We didn’t have to bid for this mandate; we have a long-term relationship with Bakrie and Bumi Resources. More recently, we worked with Recapital on the acquisition of Berau Coal. One of the reasons we got it was our long term relationship with these clients; but also, another reason is us being very familiar with the underlying assets,” Duffield said when asked how the mandate was won.
In Dec 2010, PT Recapital Advisors and its subsidiary, PT Bukit Mutiara announced its US$1.48bn acquisition of interests constituting 90% of PT Berau Coal. Holman Fenwick Willan advised Recapital on that deal.
“We have advised Bumi Resources on the acquisition of its major mining resources over the years. My personal relationship with them stretches back to 1995, approximately 15 years,” Duffield said.
Duffield started working with Bumi Resources during his days with White & Case, where he worked as a partner for 10 years (between 1993 -2003) before spending the next seven years with HFW.
Public-listed British investment firm Vallar will spend US$3bn in cash and share exchange to acquire a 75% stake in Berau Coal Energy and a 25% stake in Bumi Resources, Indonesia’s fifth largest and largest coal producers, respectively. The share exchange will result in the Bakrie group (the majority shareholder of Bumi Resources) gaining a controlling stake (43%) in the new Vallar. Recapital will acquire a 25% in Vallar. A reverse takeover will then be executed with Vallar being renamed ‘Bumi’ in the process, providing a backdoor entry to listing on the London Stock Exchange.
The Bakrie group will also gain control of Berau Coal Energy through Vallar’s acquisition stake, cementing its market leading position over the Indonesian coal industry.
In addition to the complexities of merging the stake acquisitions of three public companies and executing a reverse takeover on top of it, lawyers on all sides had to navigate tricky Indonesian regulatory requirements and avoid the need for a mandatory takeover offer of Berau Coal Energy. “That was a very significant issue as to whether or not it would trigger a mandatory offer,” he said.
Vallar is founded by Nathan Rothschild, UK’s seventh wealthiest hedge fund manager who hails from a dynastic lineage of banking heavyweights. According to Rothschild, he plans to double coal production of both Bumi and Berau in three years to achieve an output target of 140 million tonnes annually – to create an “Indonesian coal champion” that strives to become the largest coal supplier to resource hungry China.ALB
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