http://www.theaustralian.com.au/business/nexus-out-to-raise-122m/...

http://www.theaustralian.com.au/business/nexus-out-to-raise-122m/story-e6frg8zx-1226037470770


NEXUS Energy plans to raise $122m to advance its Crux liquids project off Western Australia to a final investment decision and pay debt.

In a busy day for capital raisings, Melbourne-based Nexus yesterday kicked off an underwritten three-for-10 renounceable entitlement offer at 40 a share - a 14.8 per cent discount to the theoretical ex-rights price.

Nexus managing director Richard Cottee said $70m would be spent on reducing debt to $90m and restructuring its facilities with Bank of Scotland, and $20m would be used to progress its crucial Crux project to FID this year.

Another $30m would be spent on drilling at its producing Longtom project in the hope of feeding gas into the Victorian market.

"If this carbon intensity brake comes about, it's pretty obvious the brown coal electricity generation in Victoria will have to be replaced by something less carbon problematic," Mr Cottee said.

Importantly, the raising allows Nexus to firm up an engineering and design study to enable FID for Crux by 2013, which is crucial to its agreement with Shell for an extra three years' rights.

Shell has the right to extract gas from Crux from 2023, after it extended Nexus's rights to the liquids from Crux by three years. Nexus expects the project to cost between $1 billion and $1.5bn to build before first production in 2013, which could bring in $2.5bn in revenue.

Mr Cottee, a former managing director of Queensland Gas who joined Nexus last May, said he was in talks to sell down its 85 per cent stake in the project by up to 35 per cent. Osaka Gas owns the remaining interest in Crux.

"A selldown would provide the equity under a 60-40 debt-equity split for the project to go ahead," he said.

"We think that by getting rid of our financial impediments and going to FID on our own is going to cause the farm-down discussions I'm having with a number of parties to occur earlier rather than later."

The equity raising, which is supported by its largest shareholder with 14 per cent, M&G Investment Management, marks Nexus's second equity issue since raising $74m in September 2009. Mr Cottee said he would be "upset" if the company had to come to the equity market again for Crux.

He said there had been plenty of "speed bumps" to get past since he joined, but he was optimistic no one could "do him over" after the equity raising.

"This is all about restructuring and throwing out the old loan and starting a new one that is a term loan," he said.

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