Santos sold Mereenie as part of their $1.5bn debt reduction...

Santos sold Mereenie as part of their $1.5bn debt reduction strategy, divesting a number of second tier assets.

From what I've been told Macquarie wanted to develop a east coast gas trading market, and initiated this by financing CTPs 50% purchase of Mereenie for $38m in June 2015, through debt and prepays on forward gas deliveries. Macquarie subsequently announced a $75m takeover bid for CTP in Nov 2016 and then purchased the remaining 50% of Mereenie in Dec 2016 for $52m in an effort to take the lot.

Whilst the takeover bid was rejected by CTP shareholders in March 2017, CTP remained heavily indebted to Macquarie. In my view Macquarie continued to hold the 50% stake in Mereenie in the expectation CTP would either default or Macquarie would come back for a higher offer at a later date.

Neither of these came to fruition, and Nick O'Kane's resignation at Macquarie in February co-incided with Macquarie divesting its 50% of Mereenie for $85m. By this stage CTP had reduced their debt significantly, Macquarie were unable to develop a trading market for east coast gas, and the political risk associated with gas markets had increased substantially.

AIMHO.