23/04/2009 - 00:00

Buru chairman Streitberg launches $41m takeover

23/04/2009 - 00:00

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PERTH-BASED oil and gas explorer Buru Energy has unveiled a $41 million takeover bid by a company linked to its chairman, which has proposed to fund the offer out of Buru's cash reserves.

PERTH-BASED oil and gas explorer Buru Energy has unveiled a $41 million takeover bid by a company linked to its chairman, which has proposed to fund the offer out of Buru's cash reserves.

Arenite Pty Ltd, a company associated with chairman Eric Streitberg and specifically formed for the takeover, is offering 25 cents for each Buru ordinary share and 2.5 cents for each listed option.

The offer is valued at $41.3 million, and Arenite says it will fund the offer out of Buru's existing cash reserves. Buru currently has cash reserves of $79 million.

Should the takeover proceed, Buru will effectively be privatised and delisted from the stock market.

Buru's board, excluding Mr Streitberg, has recommended the proposal.

Buru was created following the merger between Australian Worldwide Exploration (AWE) and Perth company ARC Energy. AWE holds a 15 per cent interest in Buru.

Buru managing director Adrian Cook said talks have been held with major shareholders and broad support had been received.

"The independent directors think this as an opportunity for shareholders to consider their position," he said.

"There isn't, in our view, a change in strategy or a lack of confidence in our strategy.

"It's a simple proposition that is a share price above where [Buru's] share price has traded historically."

Earlier this year, Buru downsized its exploration efforts in the Canning Basin and reduced employee numbers in response to the current economic climate.

If the takeover does not proceed, Buru said it might need to further defer exploration activities if economic conditions and oil prices do not improve.

Buru has several financial commitments that need to be met over the next five years including a $40 million obligation to Alcoa and $138 million minimum spend on its WA tenements.

"Fulfilling these commitments, together with Buru's ongoing overhead costs, is likely to cause Buru's underlying net cash backing to fall significantly below its current level," Arenite said in a statement.

Buru has an underlying net cash position of $39.3 million, Arenite said.

Mr Cook, together with the rest of the board, will step down from the company if the takeover is successful.

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