Nexus Energy shareholders have been told their holdings are probably worthless if they do not sell them into a Seven Group Holdings bid that had been levelled at just one-third the last-traded share price.
In a Nexus-funded independent expert’s report on the Seven bid released to the stock exchange last night, Deloitte said the shares would probably have no value, after debt and other liabilities were taken care of, in the likely alternative that the company went into liquidation.
Seven, whose chief executive Don Voelte stepped down as Nexus chairman in February, has bid 2c per share for Nexus, whose shares last traded at 5.9c. The stock is due to trade today for the first time since February.
“In our opinion the proposed scheme is fair and reasonable and therefore in the best interests of shareholders,” Deloitte directors Stephen Reid and Robin Polson said in the report.
The distressed situation of Nexus, whose board has said it will put the company into voluntary administration if the Seven bid is not voted through at the June 12 meeting, meant equity in the company would probably amount to nothing.
Seven’s bid values the Nexus equity at $26 million, but the Kerry Stokes-controlled company will need to pay more than $400m in other commitments if it is successful with the bid.
Deloitte estimated the fair market value of a Nexus share based on the value of its interests in the Crux field off Western Australia and the Longtom field in Bass Strait was between minus 2c and 4c, with a “preferred value” of 1c.
But adjustments based on factors including corporate costs and doubts about tax credits and a settlement with Sedco that is contingent on the Seven deal, brought the value down.
“We have calculated the value of a share in Nexus under the orderly realisation of assets method to be in the range of minus 3c to 3c with a calculated preferred value of nil,” Deloitte said.
The Nexus board says attempts to sell assets had not produced a better offer.