Far Limited

I have to say that I am extremely confused about what is going on down at Far, whose shareholder meeting scheduled for tomorrow was in my view meant to have been a rubber stamping of the Woodside acquisition of its Senegal position.

The reason for my confusion is that not long ago I reported news that Remus Horizons had effectively retreated from the high profile corporate activity it had embarked on when it was associated with Far and PetroTal amongst others. When the company ‘lost’ some 15 or more top quality members of staff, some of whom had only recently joined, it looked as if its ambitions had been somewhat curtailed.

So today I was surprised to see the Far announcement in which Remus ‘hereby confirms its intent to proceed to make an off-market takeover offer (Remus Offer) for all of the ordinary shares in FAR Limited for A$0.021 cash per FAR share’. This as well as the statement below is again rather confusing as so far there has been no binding offer and leaves Far shareholders in a tricky situation at tomorrows meeting. As I see it, should they vote against Woodside the ‘bid’ would go unconditional subject to Far management. As to its funding the company said in the statement that..

‘Remus has a present funding capacity totalling US$400 million of which it has currently allocated up to
US$250 million towards the acquisition of FAR and the provision of additional funds to FAR post the
completion of the acquisition or through a potential working capital support bridge loan (see details
later in this letter). This being more than sufficient to fund the total consideration payable to
Shareholders under the Remus Offer of approximately A$210 million.
For completeness we confirm Remus’ present funding represents unconditional investment
commitments from accredited investors and that Remus is well advanced with securing additional
funding which it recognises will be required to meet funding calls in relation to the RSSD Project in the
event the Remus Offer is successful’.

I understand that several former senior Remus executives remain more than a little sceptical about the “committed” funds ever actually landing. A previously announced bid from Remus had to be withdrawn because funds never materialised. So serious doubts must remain about Remus’ ability to complete the Far transaction. Combine that with the recent resignations of some 15 senior members of staff who walked having lost all confidence in Remus’ ability to pay salaries and creditors let alone find more than $200m to complete this transaction. With serious holes in the management team and question marks over the financial firepower, I must say I have some sympathy for the sceptical view.

Shareholders are tomorrow going to have to make a tricky decision, bag the Woodside deal or support the riskier Remus ‘offer’, the ramifications should the deal then not go through prove disappointing at the very least. Perhaps it is a good thing that Far has elected to discuss this as the first item on the agenda so that orderly debate can sort this one out….