Melbana Energy Limited (Melbana) announces its conditional intention to make a takeover offer (Offer) for 100% of the ordinary shares in Metgasco Limited (MEL) (Metgasco and Metgasco Shares). Melbana’s intention to make the Offer is conditional on it obtaining the ASIC modification discussed further below.
The Offer to Metgasco shareholders, if made, will be an all share offer under which Melbana will offer Metgasco shareholders 4 fully paid ordinary shares in the capital of Melbana (Melbana Shares) for every 1 ordinary Metgasco Share held.
Implied value of the Offer consideration
The implied value of the Offer consideration is $0.04 cents per share1 (Implied Value), which represents a premium of:
• 48% to the closing price of Metgasco Shares of $0.027 on 12 July 2019; and
• 35% to the volume weighted average price (VWAP) of Metgasco Shares from the 5 trading days since the date on which Metgasco announced the plugging and abandonment of the South Marsh Island 74 D-14 Well (SM74 D-14 Abandonment Announcement).
The Implied Value represents a discount to the 1 and 3 month VWAP of Metgasco Shares prior to the date of this announcement, which includes the period prior to the date of the SM74 D-14 Abandonment Announcement, of 4.1% and 8.5% respectively.
Terms and conditions of the Offer
The Offer will be conditional upon:
• a 50.1% minimum acceptance condition; and
• the receipt of Melbana shareholder approval for the purposes of Listing Rule 10.1 to permit M&A Advisory Pty Ltd (being a Metgasco shareholder associated with Andrew Purcell, a director of Melbana) (M&A Advisory) to participate under the Offer (or a waiver of that requirement or confirmation shareholder approval is not required), together with certain other conditions, each of which are detailed in Annexure A.
Melbana will make the necessary ASX waiver application in respect of the condition regarding M&A Advisory’s participation under the Offer and, if necessary, convene a meeting of Melbana shareholders reasonably promptly so that, if the Offer is made, the condition will be satisfied prior to the close of the Offer.
Independent board committee
The Melbana board of directors established an independent board committee to consider the terms of the potential Offer and the release of this announcement (Independent Board Committee).
The Independent Board Committee is comprised of each of the Melbana directors other than Andrew Purcell, who is a Metgasco shareholder and until 16 April 2018 was a non-executive director of Metgasco.
Pre-bid acceptance agreement
Melbana has entered into a pre-bid acceptance agreement with M&A Advisory in respect of 19.59% of the issued capital of Melbana.
Under the agreement, M&A Advisory has undertaken to accept the Offer in the absence of a superior proposal and subject to the approval of Melbana shareholders not associated with M&A Advisory or Mr Purcell (or a waiver of that requirement or confirmation that shareholder approval is not required).
Melbana’s intention to make the Offer is conditional on it first obtaining an ASIC modification of section 629 of the Corporations Act 2001 (Cth) so that it may include the condition regarding M&A Advisory’s participation under the Offer (which is set out in paragraph 2 of Annexure A) as a defeating condition under the Offer.
Melbana has submitted an application to ASIC in respect of the requested modification and will keep Metgasco and Melbana shareholders updated as to the status of that application.
Melbana is aware of a number of previous relief instruments being granted by ASIC to bidders in similar circumstances and for similar purposes. However, should the relief not be granted, then the Offer on the potential terms and conditions set out in this announcement will not be made to Metgasco shareholders.