Seven Group Holdings has declared it will have a big say in the future of beleaguered Nexus Energy even if shareholders vote down a $438 million takeover bid, highlighting its rights as the major senior debt holder.
Seven chief operating officer Ryan Stokes and chief financial officer Richard Richards yesterday kicked off a round of investor briefings in Sydney to sell the bid for Nexus.
The takeover bid has been approved by the Nexus board but faces a potential shareholder backlash.
The pair highlighted the potential for Nexus management to stay, saying there was the opportunity to leverage the oil and gas expertise of Seven and Nexus.
Seven also confirmed it had been looking at Nexus since December, after Nexus advisers approached it.
Seven chief executive Don Voelte stepped down as Nexus chairman in February, citing conflicts of interest.
Given Nexus has been under severe financial pressure since February when its Longtom gas asset in Bass Strait was suspended with debt deadlines looming, it is likely Seven was entertaining a higher bid when it started talks than its current 2c per share offer.
The bid values Nexus equity at just $27m, with the rest of the $438m made up of debt, litigation settlement and future capital expenditure over the next 18 months.
With Nexus last week declaring it would need to go into administration if shareholders voted down the Seven offer -- pitched at one-third of the company’s last-traded price -- Seven stressed it had a contingency plan.
“Seven’s control of Nexus’s senior debt will enable Seven to control the voluntary administration called by Nexus’s directors,” it said.
This should not give Seven, which is controlled by billionaire Kerry Stokes, any special advantage in a fire sale of Nexus’s assets.
But it would mean Seven could have the final say in pushing the assets to a sale, where the company could buy them or at least be repaid its debt, rather than endure a lengthy restructure or recapitalisation.
Ryan Stokes and Mr Richards, who are doing briefings in Melbourne today, told investors it was a good time to enter the gas sector.
“The Australian gas sector has experienced market dislocation, particularly small-caps, as global majors divest non-core assets, suffer cost blowouts and experience technical difficulties in collecting coal-seam gas, which has created the opportunity to acquire selected assets at reasonable valuations,” Seven said.