Nomura has reiterated its 'reduce' rating and 175 target price for FTSE 250 mining group Bumi PLC after the proposed exit from shareholder, The Bakrie Family.

The Bakries have proposed: 1) exchanging their 23.8% shareholding in Bumi PLC for 10.3% in PT Bumi; 2) acquiring Bumi PLC's remaining 18.9% of PT Bumi for $278m in cash; and 3) acquiring Bumi PLC's 85% shareholder in PT Berau for $946m in cash.

Nomura explains: "The first two parts of the proposal would see the Bakries exit Bumi PLC and Bumi PLC exit PT Bumi entirely. The third part, along with the first two, would effectively wind up the group, returning it to a cash shell. In addition, the individual proposals are not interdependent."

The broker said that parts one and two of the Bakrie offer make "strategic sense" as it would streamline Bumi PLC and refocus it on PT Berau.

However, it says that while part three (offer for Berau) appears too low, investors could be tempted to take their offer and crystallise a cash value around 50% above Bumi PLC's current share price. Nevertheless, the broker said that it remains uncertain whether the Bakries can finance this offer given their well-documented debt issues.

"Given the uncertainty around various parts of the Bakrie offer, we reiterate our 'reduce' rating and wait for further clarity around the Bakries' ability to finance the cash portions of the proposed transactions."

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