cottee says "could be truth in to rumours"

Nexus chief sees AUD 0.50 bid as opportunistic

By Michael Ross

Published: August 9 2010 15:59 | Last updated: August 9 2010 15:59

This article is provided to FT.com readers by dealReporter?a news service focused on providing insightful intelligence on event driven situations to investors. www.dealreporter.com

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Australia?s Nexus Energy [NXS:AU] would need to consider its shareholders if a takeover proposal for the company materialises, but an AUD 0.50 per share bid would probably be nothing to get excited about, Nexus Chief Executive Richard Cottee told dealReporter.

A report last week in The Australian claimed that some of Nexus? largest shareholders had been approached about an AUD 50c per share bid for the company. The report identified Royal Dutch Shell as a potential suitor given that it has rights to the gas at Nexus? Crux field.

?They maintain it?s not them [that had approached shareholders],? said Cottee, referring to Shell. Nexus? shares were put under a trading halt last Tuesday morning after its shares opened about 23% higher at AUD 0.38 1/2c following the press report. Nexus later lodged a clarifying statement with the ASX saying that it had not been approached nor was it in discussions about a takeover.

Whether or not Shell is involved, Cottee did not dismiss speculation that a third party may be considering a bid for the company. The fact that the company?s shares continue to trade at very high volume and at a significant premium despite the company?s statement that it was not involved in any discussions could be an indication that there is truth behind the rumours, he said. Around 8.25% of Nexus? shares traded last Tuesday, the day of the report, and the high turnover continued the next day with a further 1.5% traded.

?I would think [such a bid would be] fairly opportunistic,? said Cottee, noting that production at Nexus? Longtom asset is due to resume next month, after it was halted in April due to low mercury levels in produced gas. Given the value that Shell and Nexus put on the Crux asset, the offer does appear somewhat of a ?lowball,? he added.

Cottee noted that Nexus? three largest shareholders together own almost 20% of the company, which would be a good start for any bidder looking to make a play for Nexus. Viking Shipping owns about 9.3% of the company, according to its last annual report. On Tuesday, Credit-Suisse revealed it now had a 5.25% stake via a substantial holding notice with the ASX. When interviewed last week, Cottee said that he had tried to get in touch with major shareholders about the situation but had not yet received ?direct answers.?

Nexus has resisted tapping the market this year despite speculation that it would do so. It has also extended the maturity on its subordinated notes, which the company announced was ?largely due to the contribution by Cottee.?

Nexus appointed Cottee chief executive on 3 May and managing director on 22 July. He was previously managing director or Queensland Gas and NRG Energy.

A Shell spokesperson declined to comment on market speculation.


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