NZOG ad­vises share­hold­ers to re­ject Zeta of­fer

Otago Daily Times - - Business & Money - JONATHAN UN­DER­HILL

AUCK­LAND: New Zealand Oil & Gas in­de­pen­dent di­rec­tors have rec­om­mended share­hold­ers re­ject a par­tial takeover of­fer from ASX­listed Zeta Re­sources be­cause it un­der­val­ues the com­pany and favours cap­i­tal re­turn over in­vest­ment for growth.

An in­de­pen­dent val­u­a­tion of NZOG by Nor­thing­ton Part­ners val­ues the com­pany at 78c to 93c a share, above Zeta’s 72c of­fer, which the di­rec­tors said was in­ad­e­quate and ‘‘ap­pears to take no ac­count of ex­plo­ration up­side, which while risky, could be sig­nif­i­cant’’.

Zeta is seek­ing 42% of NZOG’s fully and partly paid shares it does not al­ready own, sub­ject to scal­ing. Zeta, which is ad­vised by NZOG di­rec­tor Dun­can Sav­ille’s ICM unit, has lock­up agree­ments with H&G, Ber­muda Com­mer­cial Bank, Pan Pa­cific Petroleum and UIL. It has also pitched its bid with the lure of an­other $50 mil­lion cap­i­tal re­turn to share­hold­ers in the next six months. NZOG shares rose 0.7% to 73c yes­ter­day and have gained 15% this year.

NZOG’s tar­get com­pany re­port says the com­pany’s cur­rent strat­egy is to seek fur­ther in­vest­ment in ex­plo­ration and de­vel­op­ment op­por­tu­ni­ties over the next 12 to 18 months, which it be­lieves is a su­pe­rior strat­egy to re­turn­ing cash to share­hold­ers.

‘‘Although ex­plo­ration car­ries risks, and if it is not suc­cess­ful the cash spent on it will be gone, out­sized re­turns are avail­able in re­turn for that risk,’’ chair­man and in­de­pen­dent di­rec­tor Rodger Fin­lay said.

The ap­pear­ance of OGOG, the oil and gas divi­sion of Ofer Global Group, with a pro­posal to of­fer 77c a share for no more than 70% and at least a con­trol­ling stake ‘‘fur­ther sup­ports the view that the Zeta par­tial of­fer is too low,’’ he said. OGOG has yet to make a for­mal of­fer. — Bu­jsi­nessDesk

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