Article by Nick Toscano courtesy of the Sydney Morning Herald.
Gina Rinehart, the nation’s richest person, has become the controlling shareholder of West Australian junior gas producer Warrego Energy as a months-long takeover battle for the company continues.
Hancock Energy, the energy division of the mining magnate’s privately owned Hancock Prospecting, yesterday said enough Warrego shareholders had now opted to sell their stock to Hancock at its offer price of 36 a share to give it a majority position of more than 50 per cent.
Hancock said its increased voting power meant its offer to buy Warrego would now be extended until February 24. The group called on remaining shareholders to back its proposal instead of a rival, all-scrip offer from Warrego’s joint-venture partner, Strike Energy.
Hancock said: “Hancock considers Strike’s scrip offer likely delivers an inferior outcome to all remaining Warrego shareholders in all cases.
“This includes any Warrego shareholder who may be interested in swapping their Warrego shares for Strike shares.”
Hancock’s elevation to majority owner is the latest turn in a drawnout tussle for control of ASX-listed Warrego and the prized 50 per cent interest it holds in a promising onshore gas basin 230 kilometres north of Perth.
Some of WA’s most prominent energy investors including Hancock, Strike and billionaire Kerry Stokes-backed Beach Energy have been bidding for Warrego because of its half-ownership of WA’s West Erregulla gas field, which could quickly be brought into production without the need for hydraulic fracturing in a domestic gas market that is tipped to tighten in the coming years.
Strike managing director Stuart Nicholls said the company firmly believed its offer “makes the most sense” for Warrego shareholders and for the Perth Basin as it would enable the integrated development of resources.
“Our position in Warrego is a strategic one for us as it provides us with additional ownership on top of our operated position at West Erregulla,” Nicholls said yesterday.
“We will consider our position over the coming weeks.”
In a message to Warrego shareholders yesterday, Rinehart’s Hancock Energy said Strike’s scrip offer “likely delivers an inferior outcome to Warrego shareholders in all cases”.
The statement said Hancock expected the stock prices of Strike and Warrego to continue to decline below 36 a share and to probably “decline significantly once Hancock’s offer closes”.
“Warrego shareholders should not do nothing and retain their Warrego shares because any remaining minority shareholders may face significantly reduced trading liquidity and may have difficulty realising an equivalent cash value for their shares,” it said.
