LONDON Financier Nat Rothschild, co-founder of Bumi Plc, lost his bid to oust the coal miner's board on Thursday, after a public showdown with his one-time colleagues and Indonesia's influential Bakrie family.
Shareholders elected to keep Bumi's chairman and chief executive and most of the current board, rejecting 19 of the 22 proposals made by hedge fund veteran Rothschild, scion of the banking dynasty.
The Bakries and Rothschild struck a deal in 2010 to offer investors promising Indonesian mining assets through a London company protected by UK market rules. Rothschild said at the time he wanted to make shareholders "two or three times their money", but they have lost heavily as the partnership soured, thermal coal prices tumbled and the two sides traded allegations of misuse of funds and illegal phone hacking.
The allegations of financial wrongdoing were not substantiated by a legal firm that probed them, as it said key parties were unwilling to be interviewed or provide information.
Thursday's vote, following months of sparring, moves attention to the next step in ending one of London's messiest corporate battles - the divorce with the Bakries and separating out part-owned Bumi Resources, which the Bakries had brought into the company.
The dispute has reached into the world of politics, too, involving two rival candidates for Indonesia's 2014 presidential elections.
Rothschild's own bid to rejoin the board, as executive director, received the least support from voting shareholders. Only 37 percent of those voting backed him.
Rothschild, who says his only aim is to improve Bumi's dismal share performance, called the board's victory "pyrrhic", pointing to the fact a substantial proportion of their support came from the company's heavyweight Indonesian shareholders, including the Bakries.
He said in a statement issued after the vote that the current independent directors had lost the confidence of minority shareholders and should resign.
The split with the Bakries, he said, would be a test.
"The actual split requires 75 percent shareholder support (excluding the Bakries)," he said during Thursday's meeting. "The board lacks the moral authority to go through with it."
Rothschild had wanted to oust 12 of 14 board members and bring in a new team that included himself, proposals which he said would have helped draw a line under past dramas and revive a share price languishing at a third of its June 2011 level.
The current board, though, says it has already agreed a split with the Bakries - something all sides agree is critical - in a more than $600 million (393.3 million pounds) deal that would have been jeopardised if Rothschild returned to the board.
Bumi said in a statement that directors will now prioritise the separation, a cash deal which also sees Bumi exit its minority shareholding in Bumi Resources, and will shrink the current board. A new chairman will replace the incumbent, Bakrie partner Samin Tan.
Rothschild's campaign was damaged by a last-minute stake sale by a major Indonesian investor earlier this week, freeing up shares whose voting rights had been frozen by regulators.
Indonesian investors hold 30 percent of the voting rights. The impact of the freed shares - an extra 10 percent of total shares - swung the pendulum against Rothschild, who together with his declared backers held roughly 30 percent.
The votes, totted up after the meeting in a central London military hall, showed that the defeat of Rothschild's plan was not entirely comprehensive.
While voting shareholders chose to keep Samin Tan and Bumi's chief executive, Nick von Schirnding, Rothschild was successful in his plan to remove two directors, including Bakrie ally Nalin Rathod. One of his proposed additions, diplomat Richard Gozney, will join the board.
Rothschild, the 41-year-old hedge fund veteran known for his bulging contact book, won investors' plaudits when he set up Bumi with the Bakries.
"To me, this idea of an Indonesian company married to an English (board) had the makings of a brilliant success," small shareholder, pensioner Michael Napier, said on Thursday, before asking whether the two might bury the hatchet.
Tensions came to a head after Bumi announced an independent investigation into potential wrongdoing at its Indonesian subsidiaries. Weeks later, the Bakries said they wanted to draw a line under the London adventure and pull out their assets.
All sides agree Bumi has been a disastrous foray. Its shares are down some 66 percent since a 2011 listing - even with a recovery since the start of the year - as boardroom battles added to the impact of falling thermal coal prices.
Many investors suggest the coal venture has bruised London's reputation as well as that of Indonesia. While the London market has long seen successes and failures, Bumi has highlighted corporate governance failures elsewhere in the sector, and it contributed to regulators' decision to tighten listing rules.
Adding to the complexities, Thursday's vote also pitted the families of one Indonesian presidential candidate against another. Aburizal Bakrie, patriarch of the Bakrie family, is running for the Golkar party in 2014 elections, while the brother of Rothschild backer and would-be board member Hashim Djojohadikusumo - former general Prabowo Subianto - is a rival.
"It is not personal at all," Rothschild said in the hall as votes were counted, brushing aside months of bitter recriminations. "I only have one aim - and I have around 36 million shares in this company, together with my cousin - I want the share price to appreciate."