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Petroz to Fletcher Energy - 'Thanks but no thanks'

By Phil Boeyen, ShareChat Business News Editor

Thursday 5th October 2000

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Shareholders in Australian energy explorer Petroz have voted against Fletcher Energy's proposal for a placement and rights issue with the company.

Under the proposal Fletcher Energy would have been able to subscribe for a further 70 million shares in Petroz at A43.5 cents per share to take its holding to 100 million shares, or 33.7% of Petroz's issued capital. It would also have underwritten a 3:5 rights issue.

Earlier this week Fletcher Energy exercised an option to acquire nearly 30 million shares at A43.5 cents each. A Fletcher Challenge spokesman said the result of today's vote was disappointing, and that the company was now considering its options.

At today's meeting Petroz chairman, Harvey Parker, told shareholders that the company has a substantive equity-funding obligation immediately in front of it relating to the Bayu-Undan Project in the Timor Sea.

"Petroz will be facing significant funding commitments running to tens of millions of dollars commencing in
early 2001 which we will be unable to meet in the absence of an injection of new equity funds."

Mr Parker told shareholders that the FEG proposal was the best one before the board, and that given the tight timeframe for securing funding, Petroz "does not have the luxury of further delays in waiting to see if a superior proposal emerges."

Mr Parker says a recent offer by Novus Petroleum for a merger proposal was rejected because it did not adequately value Petroz's assets, nor did it include a fair premium for control of the company.

It's understood the feeling at today's meeting was that the Fletcher Energy offer was also not high enough given the potential of the Bayu-Undan Project, which has reserves of 400 million barrels of condensate and LPG and considerable natural gas reserves as well.

At issue now is how Petroz will seek to raise the money it needs, and Mr Parker says in the absence of the Fletcher funding the Petroz board and management will now look at a number of options for the best way to optimise shareholder value. He says these include a modified form of equity raising, the sale of some or all of the company's assets, or the sale of the company as a whole.

The current major Petroz shareholders are Fletcher Challenge with 13%, ENI/British Borneo with 8.5%, GPG with 5%, and Novus Petroleum has a 2.5% stake.

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