We have not earned the respect of our shareholders... We have been a source of massive value leakage”
IT IS just 24 hours since Nick Von Schirnding was appointed chief executive of troubled coal miner Bumi, and he’s rattling around in a bare Belgravia office. The rest of the Bumi team has headed to local haunt Motcombs for the annual Christmas bash, he tells me.
The South African mining exec starts as he means to go on. He has just taken the reins of a company caught in one of the most high-profile corporate civil wars the City has seen. Trouble at the FTSE 250 coal miner has been brewing for the past year, but the “proverbial hit the fan” in September – as Von Schirnding so eloquently puts it – when City law firm Macfarlanes began an urgent probe into potential financial irregularities at Indonesian arm Bumi Resources.
London-listed Bumi shares dropped as much as 35 per cent in a morning, immediately polarising the founder shareholders – financier Nat Rothschild, Indonesian investor Rosan Roeslani and the Bakrie family. Von Schirnding, previously head of investor relations and corporate affairs, found himself cast as an independent go-between, a role that he admits has not been the easiest.
One of the first things the former communications man did when the investigation began was to go to then-chairman Indra Bakrie and co-founder Rothschild to stress his neutrality. “I work for the company,” he says. “If you blur those lines, you are in dangerous territory.”
Before being recruited by Bumi co-founder Rothschild in 2011, Von Schirnding was a senior executive at miner Anglo American, and was a key force in bringing the company to London. His experience founding a mining company on the London market was one of the reasons, he says, for Rothschild cherry picking him for his Indonesian coal venture in the first place.
His succession to chief executive was mooted about two months ago, he says. Von Schirnding was in a hotel in Singapore when Bumi non-executive director Lord Renwick called him to say he was one of the candidates the board was looking at. You must have had a Singapore Sling to celebrate, I joke, but the newly-appointed chief executive didn’t want to “spook” his chances.
The former Anglo executive accepted the role, but only on the basis that his tenure wouldn’t be “mired in legal challenges – like Polly Peck”. “Yes, we have to do the right thing and follow through with the recommendations and redress the wrongs. But I wanted to build a business,” he says.
Since being ushered in as chief executive at last week’s board meeting, he’s been doing the rounds with institutional shareholders. “They just want an end to the log-jam and dysfunctional founder shareholder relationship that we’ve had,” says Von Schirnding. “It hasn’t worked out the way it has supposed to, and we are trying to work out a solution and are carving out the business that has been troubling for us and to recalibrate. The shareholders are supportive of that.”
The business that is being “carved out” is of course Indonesian division Bumi Resources. The board announced last Wednesday it would split from the Bakries “as soon as practical”. “There really is no other alternative,” admits Von Schirnding.
Once the divorce has gone through, what is Bumi’s strategy? “Stop the noise, stop the sandpit politics, and then move on with the big structural issues – to separate from Bumi Resources and then move on. Frankly, shareholders are desperate for us to do that.”
Keeping a “razor-like” watch over costs is high up on Von Schirnding’s to-do list, and rightfully so. Since its initial public offering in 2010 as cash shell Vallar, Bumi has shed around 70 per cent of its value. “We have to earn the respect of our shareholders, and we have not earned it,” says Von Schirnding. “We have been a source of massive value leakage.”
But is the South African the right person to lead the troubled company? His background, after all, is in communications, rather than mediating a tangled corporate web.
“It depends on what you think a chief executive should be doing,” he answers. “For me, it’s three things. Firstly, setting the vision and culture of an organisation in an understandable way. Secondly, it’s about people. You can have the best assets in the world, but if you don’t have the right people running them then you aren’t going to succeed. And thirdly, it’s about making sure there’s enough cash in the bank.”
There are some who might counter that he’s been saddled with the worst job in the world. “It’s absolutely the reverse,” says Von Schirnding. “It’s a challenge, but there’s only one way up. The people we have are excellent. The assets are outstanding. Indonesia has phenomenal opportunities going forward. We have the ingredients for success, and why shouldn’t it work?”
It smells like a revolution, but the future of Bumi remains to be seen. Sitting in his empty office overlooking Buckingham Palace Gardens, Von Schirnding says it all: “Perceptions can linger for a long time.”
CV: NICK VON SCHIRNDING
Background: Born in New York, lived in South Africa. Moved to UK in 1992
Education: Educated in early years in Austria and Germany. Studied law at the University of Cape Town
Career: 1990 – joined Anglo American and De Beers, starting in South Africa
1999 – moved to head of investor and corporate affairs, when Anglo listed in London
2011 – appointed head of investor relations and corporate affairs at Bumi
2012 – promoted to chief executive to succeed Nalin Rathod
Family: Married with three children
Hobbies: Running and golf