Freshfields could face scrutiny over advice on 2010 Bumi deal

Bumi’s Indonesian investors and its co-founder Nat Rothschild, who helped bring the company to London, have been locked in a vicious and public dispute over governance of the company since the autumn of 2012. In September, Macfarlanes was brought in to look at alleged financial irregularities at Indonesian subsidiary PT Bumi Resources amidst a drop in the company’s share price.

Following a request from Bumi, the UK Takeover Panel looked into the 2010 deal that created the company. In its December report, the panel found that Indonesian investors the Bakrie family and Rosan Roeslani (through his company Bukit Mutiara) were acting in concert when their coal companies combined with Vallar - which later became Bumi - and so must cap the voting rights on their combined 57 per cent stake to under 30 per cent.

Under Takeover Panel rules, investors owning 30 per cent or more of a company must, subject to a waiver, make a general offer for the whole of the company.

The Takeover Panel added that it is separately “undertaking an investigation into why it was not previously made aware of the existence of the concert party, and why a Rule 9 waiver was not sought in relation to the transactions”.

It is a move that could bring Freshfields, which acted as legal adviser to Vallar at the time with corporate partner Julian Makin leading a team including partners Ben Spiers, Stephen Hewes and Claire Wills, into the spotlight. Following the report by the Takeover Panel, the Bakrie brothers have been quoted in the national press as blaming Rothschild for failing to disclose the relationship. A source close to Nat Rothschild’s NR Investments, however, is reported to have said that the board of Vallar “approved the acquisition in November 2010, on the basis of advice from its legal and financial advisers, who led all interactions with the Takeover Panel on behalf of the Vallar plc board … [which] was not made aware of any concert party issues.”

A source close to the case told The Lawyer that it was likely that the financial advisers would come under more scrutiny than the legal advisers. Vallar’s financial adviser for the 2010 deal was JPMorgan. Freshfields declined to comment.

The news comes as the shareholder war at Bumi continues to rage, with the Bakrie brothers and Rothschild submitting their own plans to shareholders as to how the collaboration should be unwound. Berwin Leighton Paisner (BLP) and Clifford Chance have taken key advisory roles on this.

BLP litigation partner Graham Shear, corporate finance partner Benjamin Lee and Singapore head Alistair Duffield are all understood to be advising Indonesian family the Bakrie Brothers, who own 23.8 per cent of Bumi.

BLP is advising Bakrie & Brothers on its general strategy, as well as on regulatory and contentious matters. The firm is also advising the company on its proposals to sell its stake in Bumi in return for several key mines, and on questions from the UK Takeover Panel.

Freshfields partner Hewes, meanwhile, is understood to still be advising Bumi on current matters, while Clifford Chance partners Jeremy Sandelson and Roger Leese are acting for Bumi Resources. Gibson Dunn & Crutcher is understood to be advising Nat Rothschild, though the firm would not comment on which partners are acting.