As expected, Shell and PetroChina sweetened their combined bid for Arrow Energy with a bit more cash and certainty for the international assets to be valued, and the Australian company said yes.
Arrow Energy said it was telling shareholders to accept the new, higher offer from Royal Dutch Shell and PetroChina.
Shell and PetroChina lifted their offer to $4.70 a share in cash for Arrow’s Australian assets plus one share in a new listed entity to be called Dart Energy, which will house the group’s Asian exploration assets and some Australian assets.
The new offer is pitched at a 35% premium to Arrow’s last trade ahead of March 8 when the first bid was revealed. It values the Australian assets at $3.44 billion.
The deal sweetens the initial offer to Arrow shareholders of $4.45 per share, or $3.3 billion, plus a share in the planned spin-off, Arrow International spin-off.
Dart Energy will comprise of 90% of Arrow’s interest in Arrow Energy International, which holds the existing portfolio of international assets in China, India, Vietnam and Indonesia, Arrow said. It will also include some Arrow Energy stakes in companies listed on the Australian Securities Exchange.
These included 21.04% shareholding in Apollo Gas Ltd, 1.4% shareholding in Bow Energy Ltd, and 7.5% shareholding in Liquefied Natural Gas Ltd.
Farm-in rights into Apollo Gas’s licences in NSW will also be part of Dart Energy, as will $45 million cash, a $US25 million ($27.3 million) loan facility from Shell and ‘‘co-operation with PetroChina in relation to future coal seam gas opportunities in China’’.
"Shell will retain its 10 percent interest in Arrow Energy’s existing portfolio of international assets (through its shareholding in Arrow Energy International Pte Ltd)," Arrow said in the statement.
"Dart Energy will be led by the existing Arrow Energy management team (Nick Davies, Shaun Scott, Stephen Bizzell, Graham Yerbury) and the previously announced new CEO/MD Simon Potter.
"The Demerger allows Arrow Energy Shareholders to continue to participate, through Dart Energy, in Arrow Energy’s dynamic international growth strategy and NSW coal seam gas opportunities."
‘‘The Arrow board unanimously recommends that Arrow Energy shareholders vote in favour of both schemes,’’ Arrow said in its ASX statement.
The company said its directors would vote their shares in favour of the schemes, in the absence of a better proposal and subject to an independent expert’s report.
"The Demerger and the Acquisition will occur under two separate Court approved Schemes of Arrangements," Arrow directors said.
"Under the Schemes, Arrow Energy shareholders will receive one share in the demerged Dart Energy for each Arrow Energy share and separately a cash payment from CSCo for the Acquisition of the Queensland CSG business if both Schemes are approved.
"The proposed demerger will be achieved by distributing the shares in Dart Energy to Arrow Energy’s shareholders prior to Acquisition of Arrow Energy by CSCo. Arrow Energy, CSCo and Dart Energy have agreed to a 9 month transitional services agreement to facilitate an orderly demerger process."
Arrow shares fell 19c, or 3.6%, to $5.10. The market thinks this is a done deal.
