The tangled web that is Bumi (Other OTC: VLLRF - news) , a coal mining business brought to the London stockmarket by Nat Rothschild, got even more tangled on Wednesday with the intervention of the Takeover Panel.
It is investigating why a concert party between two sets of shareholders (who also separately sold mining assets to Bumi when it was a cash shell) was not disclosed to the market.
The lack of disclosure is a serious matter but it’s odd because there’s no obvious reason for keeping something like that secret. The panel’s investigation will establish whether this was cock-up or conspiracy. Either way it’s not going to reflect well on Bumi (previously known as Vallar when it first floated as a shell company), its advisers or, for that matter, Rothschild. He claims the shareholders gave Vallar warranties that they weren’t a concert party. But is that sufficient for a London-listed company? Where was the due diligence from the purchaser to establish independently what the situation was? Did (KOSDAQ: 074130.KQ - news) they do the sort of work that the panel has since recently carried out to establish the facts?
To say that the Vallar/Bumi flotation has been unsatisfactory is the understatement of 2012. It has failed on pretty much every level, from share price performance to corporate governance. Rothschild’s attempts to correct the mess are all very well but are judged “undeliverable” by Bumi’s senior independent non-executive, Sir Julian Horn-Smith. The Rothschild plans also involve asking shareholders for yet more money, which is not tenable.
Shareholders who were persuaded to back Rothschild’s original idea are a long way from seeing any resolution and there are a lot more questions to answer about what has gone on here.
What is certain is that London’s reputation as a financial centre is already tarnished enough without the Bumis of this world making it worse. Sadly for Rothschild, who carries a great financial name on his shoulders, it’s hard to see how any right-minded investor will want to risk backing him again after this.