Australia’s Sino Gas & Energy (Sino Gas) said that it has received a takeover offer of A$530m ($401m) from US private equity firm Lone Star in an all-cash deal.
Image: Production activities at the Linxing PSC in Shanxi province. Photo: courtesy of Sino Gas & Energy Holdings Limited.
In this regard, the Australian firm, which focuses on developing Chinese unconventional gas assets, has entered into a scheme implementation agreement with a subsidiary of Lone Star Fund X Acquisitions.
As per the terms of the deal, shareholders of Sino Gas will be paid A$0.25 ($0.19) per Sino Gas share.
The proposal from Lone Star has the backing of the directors of Sino Gas who have unanimously recommended the energy company’s shareholders to vote in favor of the scheme.
The recommendation will be subject to absence of a superior proposal from another party and also to conclusion from an independent expert that the scheme is in the best interests of the shareholders.
Sino Gas managing director Glenn Corrie said: “The 100% cash consideration represents an attractive premium to recent trading prices, and provides certainty of value for Sino shareholders.
“While the Sino Gas Directors remain of the view that the business and assets have significant potential, they acknowledge that the cash consideration provides shareholders with cash certain value now versus the future risks and uncertainties associated with the business.”
Sino Gas owns a stake of 49% in Sino Gas & Energy (SGE) through a strategic partnership with China New Energy Mining (CNEML).
Established in Beijing since 2005, SGE is the operator of the Linxing and Sanjiaobei Production Sharing Contracts (PSCs) in the Ordos Basin in Shanxi province.
In the Linxing PSC, SGE holds a stake of 64.75% and is partnered by CUCBM. The company owns a stake of 49% in Sanjiaobei PSC where it is partnered by PetroChina CBM.
SGE had acquired the two Chinese PSCs in 2006 from Chevron and in the same year reported gas discoveries at the assets following drilling of its first wells.