So what will happen in the play for control of Pure Energy Resources?
Arrow Energy has let its $7.16 a share offer expire without getting majority control, leaving BG Group of the UK with a 33%, or thereabouts, stake.
Arrow’s closed last Friday March 13, leaving it with a 20.31% stake in Pure.
The company didn’t say what its plans are for the stake.
Its major shareholder, Royal Dutch Shell has around 11% of Pure’s shares and has said that in the absence of a higher offer, it will sell them to BG Group.
But the situation remains uncertain: BG cannot get unconditional control without taking out Arrow.
BG has a $1.03 billion, $8.25 a share cash offer for Pure on the table, should it reach 90%. If it doesn’t, they will get $8 a share.
That is a small carrot to get some movement, but knowing how corporate minds work, there will be either a higher price, or some group of assets that will be enough to convince Arrow to start talking turkey with BG.
Money tied up in stock market positions not going anywhere or generating a return can make banks and other shareholders nervous these days.
Arrow separately said yesterday it had also agreed to buy 75.25% of Far East Energy Corp’s stake in the Qinnan coal-seam methane venture in China. Arrow said it had also agreed to invest in convertible notes, which, if converted, will give it an 11.5% in Far East Energy.
The Qinnan project is in Shanxi. Houston-based Far East Energy is the operator and foreign contractor to China United Coalbed Methane for three permit areas, including the Qinnan block, which will be transferred “shortly” to PetroChina. Arrow said Shell will have the right to take half of Arrow’s interest in the venture.
But it is going to have to chat to BG group.
Both bid for the coal seam methane reserves Pure owns. BG controls Queensland Gas Co and last year unsuccessfully bid for Origin Energy.
Pure’s shares closed at $8.15 yesterday, down 2c. Arrow’s shares ended at $2.61, up 5c.
Arrow is said to have around $14 million in profits on the deal which it might want to postpone taking until the new financial year from July 1.
In a statement late yesterday the independent directors of Pure Energy said accept the BG offer.
“The independent directors of Pure Energy Resources Limited note that the takeover offer by Arrow Energy Limited for Pure shares closed on Friday, 13 March 2009 and is no longer capable of being accepted by Pure shareholders.
“The independent directors of Pure unanimously recommend that Pure shareholders accept the offer from BG Group.
“BG’s offer is currently scheduled to close at on 23 March, 2009, unless extended. The independent directors encourage Pure shareholders to accept BG’s offer without delay.”
