The founding shareholders of Eneabba Gas Ltd have taken the extraordinary step of canceling 35 million shares and 26.25 million options collectively worth $12.5 million.
The founding shareholders of Eneabba Gas Ltd have taken the extraordinary step of canceling 35 million shares and 26.25 million options collectively worth $12.5 million.
Managing director Mark Babidge's stake has been reduced from 20 million shares to five million shares while director Thomas Goh's stake has been halved to five million shares.
Former chairman John Saunders, who was replaced by Reg Gillard prior to the company's initial public offering, has also cut his stake in the company.
Mr Babidge said the cancellation was designed to reward investors who had provided seed capital or invested through the IPO, which raised $8.3 million.
The shares listed on the ASX in late April, more than two months later than originally planned after the company was required to issue a supplementary prospectus.
"As promoters, we were aware of a bit of pain for people who put in their money and faced delays," Mr Babidge said.
"We were looking for some way to reward them for being so loyal.
"But most importantly, for all those people who didn't invest or did invest and pulled their money out, tough."
While the listing was delayed, the shares are trading at 27.5 cents, just above their 25 cents issue price. The 1-for-2 options issued to subscribers for free are trading at 10-12 cents.
Mr Babidge said the shares cancellation would also provide the company with more flexibility as it pursues plans to develop a power station in the Mid West region.
Separate to the cancellation, the company has agreed to issue Messrs Babidge and Goh with 5 million and 2.5 million shares respectively.
The new shares will be held in escrow until June 2008 and will be forfeited if the company does not have unconditional construction approval for the power station by that time.
THE FULL ASX RELEASE APPEARS BELOW
CHANGES TO CAPITAL STRUCTURE
Eneabba Gas Limited has reached agreement with two major shareholders and promoters
of the Company's recent IPO ("Founding Shareholders"), as a result of which 35,000,001
ordinary shares and 26,250,000 options (to acquire shares) will be cancelled for nil
consideration. This cancellation will result in the total number of shares being reduced
from 104,376,004 to 69,376,003 (34% reduction), whilst total options on issue will be
reduced from 72,038,000 to 45,788,000 (36% reduction).
Woden Pty Ltd, a company related to director, Mr Mark Babidge has agreed to the
cancellation of 30,000,001 shares and 22,500,000 options held by it. Mr Thomas Goh, also
a director of the Company has agreed to the cancellation of 5,000,000 shares and 3,750,000
options held by him.
Over the last few days, comments from the West Australian State Government indicate that
the Mid-West region of Western Australia is poised for quicker and stronger growth
(particularly in respect to the Oakajee port project and resultant announcements by iron ore
projects in the region) than had been anticipated by the Company. Consequently, the
Company's proposal for the completion of a feasibility study and eventual construction of a
power station in this region of WA has gained greater urgency. Whilst the recent
completion of the $8.3 million IPO leaves the Company in a good position to achieve this
goal, the securing of an agreement for the cancellation of a substantial proportion of its
securities gives the Company even greater commercial flexibility for any future capital
raisings or securing joint venture arrangements.
The Founding Shareholders acknowledge the loyalty and support from the seed capitalists
in the Company, as well as from those investors who subscribed for securities in the recent
prospectus issue. Their acknowledgement of this loyalty and support has now been
translated into a solid gesture that puts the Company in an even stronger position to achieve
its objective of establishing the proposed power station near Dongara, Western Australia.
In securing this agreement for the cancellation of securities, the independent directors
recognise that the Company's two executive directors, Messrs Mark Babidge and Thomas
Goh remain committed to achievement of the Company's objectives. The Company
proposes to issue Mr Babidge and Mr Goh with 5 million shares and 2.5 million shares
respectively.
This proposed issue is subject to shareholder approval and the shares will be subject to such
escrow conditions as may be imposed by ASX, but, in any case, subject to a voluntary
escrow up to 30 June 2008. In the event that the Company does not receive unconditional
construction approval for its proposed power station by 30 June 2008, the shares will be
forfeited. The forfeiture condition will not apply if, prior to that date, the Company
disposes of its major assets and substantial undertakings.
A shareholders meeting will be convened as soon as possible to seek shareholder approval
for the above matters in accordance with the requirements of the ASX Listing Rules and
the Corporations Act.