In schemes of arrangement, it is rare for the offer to be increased as it needs to go through the courts again and it is considered a friendly takeover (at least in respect of the SEH board in this situation) and the price has been agreed by both bidder and target. Our best hope is for another party to submit a competing offer and that is most likely going to be a Chinese company but they could quite easily play dirty with the assistance of government and SOE interference.
I'm not happy but unfortunately I think we are in a no win situation here. Clearly the SEH board is exhausted and wants out and they consider 25c an acceptable price. With 45% of the register being retail investors and, for a takeover to be successful they need 90%+ acceptances, I'm not sure an off-market takeover will be quick or clean.
With a lack of support from the board I have a feeling we aren't going to get a substantially higher price. Also, if this scheme falls through, does the board still have our support? It takes years to build relationships in China if we get a new CEO.
If CNEML truly have funding issues SEH has a problem. It would be better if Lone Star took over them and not us but I'm sure Lone Star will help fund CNEML if this takeover goes through and the Chinese JV partner is important.
If LXG contract has disagreements which are hard to resolve in SEH's favour, then SEH has a problem.
The production chart that SEH management has been displaying with peak production of 500mmscf/day+ within about 4 years looks more like a promotional tool than a chart of realistic expectation in my opinion - because if it was realistic and we are going to be cash flow positive in 2 years, a 25c takeover is BS. I'm sure the analysts who have been doing reports on SEH are mighty peeved off about this and it sounded like it caught them all unawares today.
SEH Price at posting:
23.5¢ Sentiment: Hold Disclosure: Held
