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Freshfields and HFW criticised by Takeover Panel for breaching rules in Bumi transaction

In a rare step, Freshfields Bruckhaus Deringer and Holman Fenwick Willan (HFW) have been publicly criticised by the UK Takeover Panel for breaching its code of conduct when advising on the formation of a multibillion-dollar Indonesian coal group.

London’s takeover regulator launched the investigation in December 2012, and concluded that Freshfields and HFW breached rules when instructing on the formation of the coal group Bumi.

Freshfields had advised takeover company Vallar, while HFW had advised the two Indonesian coal mining companies involved.

The takeover panel found HFW had failed to properly disclose that Bumi’s founding shareholders, the Bakrie Group, and Indonesian shareholder Rosan Roeslani, were acting as concert parties in acquiring stakes totaling more than 30% in Bumi’s predecessor company, given they had close ties to each other when the deal was announced in 2011.

The panel also concluded that Freshfields’ failed to notify the panel prior to the announcement of the Indonesian transactions and said the firm ‘could have done more regarding the concert party issue but makes no finding of breach in relation to section 6(b) of the introduction’.

The panel’s statement said: ‘Freshfields and HFW did not take all reasonable care to ensure that the commercial background to the forward-sale arrangements, and their purpose, was fairly presented to the panel.

‘Freshfields and HFW did not ensure that the direct and causative connection between the collateral requirements under the jumbo loan and the forward-sale arrangements, of which they were each aware, was properly explained to the panel.’

A Freshfields spokesperson said the firm co-operated with the enquiry and has accepted the panel’s conclusions.

‘The panel concludes that Freshfields (and other advisers) failed to provide the Takeover Panel with some information that was relevant in considering the submission, but accepted that there was no intention on the part of any of the advisers to mislead the panel.’

HFW said in a statement: ‘The public statement was issued with the consent of all parties involved and, as such, it is not appropriate for us to make further comment.’ 

The panel has also publicly criticised financial adviser Credit Suisse. It did not impose any fines or other penalties.