Article by Sean Smith courtesy of the West Australian.
Gina Rinehart has crashed the agreed buyout of Warrego Energy — launching a $280 million counter offer that could flush out more suitors for the Perth Basin gas play.
The 23¢-a-share offer by Mrs Rinehart’s cashed-up Hancock Prospecting tops an agreed 20¢ offer by Beach Energy after the Warrego board passed over an all-scrip proposal by Strike Energy. The news came as Hancock underlined its financial muscle by closing out a busy three days of reporting by Mrs Rinehart’s major earners and announced a near $6 billion profit. Hancock encompasses not only Mrs Rinehart’s iron ore mining interests in the Pilbara, including her half share of the Rio Tinto partnership over the Hope Downs mines, but her investments across coal, beef and agriculture. The after-tax profit of $5.8b for the year to June 30 is down from the previous year’s record $7.3b. Hancock’s revenue fell to $14.6b from $16.6b, mainly reflecting the lower contribution from its 70 per cent-owned Roy Hill iron ore mine, the group’s biggest money-spinner.
Hancock’s takeover documents revealed the group had been in confidential takeover talks with Warrego but those talks had “now ceased”.
Stuart Johnston, director of Mrs Rinehart’s Hancock Energy, described the offer as “attractive and compelling for Warrego shareholders, including in light of recent proposals they have received”. Hancock already has a foot in gas through a 49.9 per cent stake in east coast producer Senex Energy and is the second biggest shareholder in another Perth Basin player, Norwest Energy, with 3 per cent.
Warrego and Strike are equal partners in the proposed West Erregulla gas development in the Perth Basin, with the companies already sitting on gas supply contracts with the likes of Wesfarmers and Alcoa.
Hancock said it saw Warrego as “complementary and a strategic fit”. It also suggested it was open to further consolidation in the region if successful, citing the opportunity to “collaborate with parties including existing Warrego joint venture partners and others with interests in Warrego’s areas of operation”.
Seven Group Holdings, the major shareholder in Seven West Media, publisher of The West Australian, has a 30 per cent stake in Beach Energy.
Hancock said its offer was free of minimum acceptance conditions and therefore offered a cash return to Warrego shareholders no matter whether it gained control. That would also neutralise Strike’s 8 per cent shareholding which, under a scheme offer could potentially block a bidder from moving to compulsory acquisition.
