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Dual-listed L&M Energy's (LME) chairman Geoff Loudon is on the cusp of attaining 90% of the shares required in his almost $13 million takeover bid for the listed coal bed methane gas explorer, which has extensive interests in Otago and Southland.
Mr Loudon, who launched his takeover in late-October, yesterday notified the stock exchange that his company, New Dawn Energy, had attained acceptances for 673.9 million of LME shares and his stake now stood at 89.3% of the LME shares on issue.
The offer had recently been extended from its original closing date tomorrow to January 31, but Mr Loudon appears assured of easily meeting the conditional 90% target before then.
Once 90% is attained, Mr Loudon automatically gets to purchase the outstanding 10% of shares. He is offering A6c per share (NZ7.6c), a 43% premium for shareholders.
In June Mr Loudon lent cash-strapped LME a $6.32 million bridging loan, which later became a convertible note, following shareholder approval. Estimates of LME's exploration spending on a variety of lower South Island mineral deposits over several years sits at about $40 million.
Before his takeover offer, Mr Loudon and associated companies held 77% of LME. The remaining 23% was valued at $12.9 million, Craigs Investment partners broker, Greg Easton said.
At the takeover offer price, LME was valued at $56.7 million, he said.
He noted it had been signalled before the offer LME required more shareholder capital, and while delisting the company would make it more efficient for New Dawn to operate, refinancing would have to come from privately held New Dawn.
Six months ago LME was considering a listing on the mining-friendly Toronto stock exchange, in preparation for accelerating its exploration drilling in Taranaki during the subsequent 18 months. Mr Loudon last year said the Taranaki region produced 55,000 barrels of oil a day from 18 onshore and offshore oil and gas fields. L&M planned to drill at least three wells at two Taranaki sites and to apply for new exploration blocks to increase L&M's Taranaki presence, he said. L&M had posted a loss for the year ended December 2011 of $4.8 million, with total costs of $7 million. A $3.4 million Ohai pilot project in Southland was not included in the bottom line because it was exploration work in progress.