Decision time for Energy shareholders

By Phil Boeyen, ShareChat Business News Editor

Friday 2nd March 2001

The new bidder for Fletcher Energy, Peak Petroleum, has increased its bid for the company but it may be too little too late.

A High Court hearing yesterday failed to support Peak's attempt to get Tuesday's vote to sell Energy to Shell postponed.

Greymouth Petroleum, which is behind the Peak bid, has increased the cash component of the bid by US15 cents to US$3.85 - US30 cents higher than the Shell and Apache offer.

Shell and Apache bid up their offer earlier this week, raising it from US$3.34 to $US3.55.

However the increased Peak bid has failed to impress Fletcher Energy boss Michael Andrews.

"Any suggestion that Greymouth has offered US$3.85 or any other amount is entirely illusory," he says.

"Greymouth is currently free of any formal obligation or commercial contract, and is therefore able to suggest any dollar figure that may have the effect of seducing shareholders."

The Fletcher board is still recommending the Shell and Apache bid, and has consistently warned shareholders that the two companies can walk away from the offer if the sale is not completed by March 23rd.

Fletcher chairman Rod Deane says Shell and Apache have advised that the increased bid is their final offer, and that they will not be extending their offer beyond the deadline.

Broker Forsyth Barr, which has been recommending its clients vote against the Shell and Apache offer, earlier said the $3.70 bid by Peak was not high enough.

"It's a shrewd counter-bid but it still substantially undervalues the company," says Forsyth Barr analyst Ian Graham.

"We've still got a minimum cash component offer on the share of US$3.98. We've analysed Peak's backing and believe they could raise their bid to US$3.95," he says.

Mr Graham admits it's a very confusing time for Fletcher shareholders.

For the Shell and Apache deal to go ahead, at least 75% of Fletcher Energy shareholders will need to vote for the proposal.

Peak has claimed it could get an unconditional offer to shareholders by March 23rd following due diligence, but unless it stumps up with a higher offer before Tuesday, shareholders may well decide that a buck in the hand is the better proposal.

Comments from our readers

No comments yet