Three items of interest, page-8

Let’s have a look at the timeline of events (please correct me if I’ve misstated anything):

06 Jun 13: NXS states "No need to raise equity to satisfy short term funding over next 12 months with focus on dual-track asset divestment process to provide medium term funding"

27 Dec 13: Revision of the Longtom Debt Facility (Sr Debt Facility). Transfer of facility from BOSI to Nomura and Merrill Lynch. NXS states ‘Following recent discussions with Nomura and Merrill Lynch, the Nexus Board of Directors has agreed to amend the existing review event provisions to provide the time necessary for the continuance of the Company’s various strategic discussions with third parties.’ This revision included:

>A review event that includes either a debt refinance or Nexus executing a binding agreement by 2 April 2014 with a third party that will retire the outstanding Longtom SDF amount and fully cash back the undrawn $60 million letter of credit, by 1 July 2014.

>A restatement of the principal outstanding from 2 January 2014 to:

• $42.4 million plus $2 million to be capitalised on 2 January 2014; or
• $42.4 million plus $5 million to be capitalised if the Company fails to execute a binding agreement described above by 2 April 2014.

18 Feb 14: Resignation of Chairman Don Voelte

18 Feb 14: Share trading halted pending update on strategic review process

21 Feb 14: Nexus says production at Longtom Gas Processing Facility halted

12 Mar 14:    Nexus says production partially resumed

12 Mar 14:    Settlement of Sedco claim for US$30m conditional upon Nexus executing a binding asset or corporate sale transaction by 2 April 2014 and such a transaction completing by 31 August 2014.

31 Mar 14: Conditional Merger Implementation Agreement entered into with Seven Group Holdings under which Seven will acquire all of the shares at A$0.02 per share subject to regulatory and other conditions. Bridge facility of A$40m entered into with Seven Group. Seven Group enters into agreements to acquire all of the senior debt and not less than 66.67% of aggregate face value of subordinated debt. Among key terms of the conditional implementation agreement, one being exclusivity including no shop no talk provisions.  

Observations:

In Dec ‘13 the senior debt facility is renegotiated such that Nexus is required to enter into a binding agreement by 2 April ’14 with a third party that will retire the facility. Is it a coincidence that the Sedco claim is also negotiated 3 months later such that it is conditional upon Nexus executing a binding asset or corporate sale transaction by 2 April ’14 and Nexus actually entering into a corporate sale transaction by 31 Mar ‘14 i.e. just shy of the 02 Apr ‘14 deadline? To exacerbate the liquidity crunch isn’t it coincidental that your only producing asset goes offline? What I want to stress is that even if we give the benefit of the doubt and say that this is all a mere coincidence, why oh why is a capital raise deemed not to be an option for the board to pursue? Isn’t it logical that you should return to the owners of the business for liquidity when all else fails? Why make an assumption that the offer on hand or voluntary administration are your only viable options?