Queensland Gas still pursues Sydney GasThursday Mar 9 21:35...

Queensland Gas still pursues Sydney Gas

Thursday Mar 9 21:35 AEDT

Queensland Gas Company Ltd says it will continue in its quest to take over Sydney Gas Ltd despite the Takeover's Panel ruling the offer was unacceptable.

The Takeovers Panel said Queensland Gas bidder's statement contained misleading information and ordered that any acceptances of the offer be revoked.

It said the offer also omitted material information and some parts of it were confusing, ordering a new bidder's statement be provided.

The Panel also ruled there was no clear or intelligible explanation of the conditional nature of the offer nor were shareholders made aware of "the potential delays in being able to deliver funds to Sydney Gas".

Queensland Gas managing director Richard Cottee said the Takeovers Panel decision had prolonged the takeover and could have been avoided had Sydney Gas co-operated early on.

"We were very surprised, and a little bit annoyed, that all of our offers to discuss the matters with them before the bidder's statement was put out ... were repelled," he said.

"Instead on the eleventh hour they went straight to the Takeover's Panel.

Queensland Gas has already requested a review of the decision but said it would comply with the Takeovers Panel's orders.

"We are obviously going to keep pursuing it," Mr Cottee said.

"If any more defeating conditions occur we will take our counsel at that point in time."

Sydney Gas said the decision vindicated its concerns about the offer, but said it had not been trying to thwart the bid.

"This vindicates Sydney Gas' decision to seek clarification in the Takeover Panel on the Queensland Gas bidder's statement," a Sydney Gas spokesperson said.

"Sydney Gas only sought to ensure that its shareholders had all the relevant information in relation to QGC's offer."

A key part in the takeover was an offer by Queensland Gas to fund the redemption of $30 million of convertible notes held by The Australian Gas Light Company (AGL).

The Takeovers Panel said Queensland Gas didn't alert Sydney Gas shareholders to the possibility that their company could fund the first tranche of the notes, which fall due on April 1.

Sydney Gas said was is looking at ways to fund the first tranche.

The company has $24 million in cash but is committed to spending large sums on the development of its Camden Gas Project joint venture with AGL.

Also, Sydney Gas reported a net loss of $1.66 million for the first half of 2005/06, narrowing from a $2.75 million loss in the previous corresponding period.

The result was boosted by a one-off gain of $10.4 million from the sale of half the company's petroleum interest to AGL under its joint venture agreement in November.

Sydney Gas said it was expecting further improvements in the second half, despite warning that production revenues would be lower now that 50 per cent of the earnings now flowed to AGL.

Queensland Gas launched its tilt at Sydney Gas in January, with an unsolicited, all-scrip offer of one Queensland gas share for every two Sydney Gas shares held.

At the time Queensland Gas's shares were around 72 cents, valuing the offer at around $88 million, but with its share price now at 81.5 cents the deal is now closer to $100 million.

Both Sydney Gas and Queensland Gas shares are in a trading halt, Sydney Gas last traded at 35 cents.


©AAP 2005