Cooper Energy is set to pocket some $23 million after deciding to accept the higher cash takeover offer for Incremental Petroleum.
Cooper Energy is set to pocket some $23 million after deciding to accept the higher takeover cash offer for Incremental Petroleum.
Yesterday, Texas-based TransAtlantic Petroleum Corporation lifted its cash offer from $1.05 to $1.07 and freed to bid from all conditions.
Cooper, which unsuccessfully launched a takeover bid for Incremental last year, holds a 27 per cent interest.
The interest was seen as a blocking stake to TransAtlantic's bid, which had a minimum acceptance condition of 75 per cent.
The company said the $23 million would boost its cash reserves to $88 million, which will be used to pursue and acquire "high value" oil and gas assets.
The offer is scheduled to close on February 27.
Cooper's announcement is below:
Cooper Energy Limited (ASX: COE) announces that it has accepted the TransAtlantic Petroleum offer for its shares in Incremental Petroleum (ASX: IPM).
This follows TransAtlantic's decision to raise its offer to A$1.07 per share and to declare the offer unconditional.
Cooper Energy's acceptance of the increased offer will result in the injection of approximately A$23 million into the Company's cash reserves, which will increase upon payment to a total of approximately A$88 million. The Board believes that this is the most prudent course of action in the current volatile market conditions.
Primarily the Board did not believe that retaining a minority investment of declining value would be in the best interests of Cooper Energy's shareholders.
Cooper Energy will now use the A$88 million in cash reserves to pursue and acquire high value oil and gas assets in order to further grow the Company.
Cooper Energy originally spent A$10.6 million and issued 39.7 million shares to acquire 21.4 million shares in Incremental, a stake of 27%.The average price paid for each Incremental share was A$0.96.
By accepting the TransAtlantic offer, Cooper has effectively completed a capital raising at 31c per Cooper Energy share - a significant premium to Cooper's current share price of 25c per share, which is a good result in the current financial environment.
Cooper Energy's Managing Director Mike Scott said the offer from TransAtlantic exceeded Cooper Energy's updated internal valuation for Incremental Petroleum.
"This made accepting the offer and banking the cash the most commercially sensible and risk free option available to us at this time," said Mr Scott.
"With the current financial crisis flushing out a number of opportunities, Cooper Energy is looking forward to leveraging off its strong cash position and high-margin Australian oil production to secure one or more quality oil and gas assets thereby positioning the Company for future growth."
