Australian CBM player reluctant over proposed takeover

Landbridge Energy Australia is positioning itself to seize a majority stake in Australian coalbed methane (CBM) player, WestSide. Directors at WestSide have signalled disappointment with the deal, but have recommended shareholders accept a takeover offer from Landbridge.

Landbridge announced that it now had a 31.04% interest in WestSide after increasing its interest as part of a share acquisition from the company’s second largest shareholders, New Hope.

WestSide said it understood New Hope intended to sell the remainder of its holding over the coming days.

“This means that Landbridge is likely to be able to exert significant influence over WestSide in the future,” the company said.

Directors had previously taken the approach that shareholders should take no action on the offer, but has since changed that.

WestSide said the offer did not recognise the full value for shareholders.

“WestSide has worked hard to solicit alternative interest in WestSide, but despite discussions with a number of parties no alternative proposal has been forthcoming to date.”

The company said if Landbridge acquired a majority but not the whole of the company, the number of shares traded on the Australian Securities Exchange would be reduce, lessening the value of those shares for those who do not accept the offer.

It said shares could become illiquid and infrequently traded if this was to go ahead.

“Those shareholders who choose not to accept Landbridge’s offer may enjoy future benefits if WestSide’s current plans can be realised, but there are risks to this occurring which shareholders need to consider in making their decision.”

WestSide chairman Rob Neale said this was a disappointing outcome for the company.

“It is disappointing for all of us that effective control of the company seems likely to pass at this price before any of the benefits from that success can be reaped.”

Late last year a takeover bid fell through with China’s PetroChina, when the company cancelled the deal.

WestSide has significant uncontracted gas reserves and exploration interests in Queensland.

WestSide operates the Meridian coalbed methane fields west of Gladstone.

The fields are positioned near the hub of the Queensland LNG development on Curtis Island.

WestSide has announced continued good progress on development of the Meridian gas field with drilling having commenced in late May and the first of up to six new production wells expected to be on-line in July. All of these wells are scheduled to be commissioned before the end of September.

In a strongly worded letter to shareholders, WestSide said “You can take comfort from the knowledge that this protracted [takeover] process, initiated by Landbridge, has not distracted management from forging ahead with its plans to extract full value from the Meridian gas field - value which Landbridge is seeking to secure for its own shareholders at your expense.”

WestSide holds a number of other permits in the Bowen basin and the Galilee basin.

Edited from various sources by Sam Dodson

Read the article online at: https://www.worldcoal.com/cbm/04072014/potential_takeover_of_australian_cbm_player_cbm66/