Nexus Energy hopes its gas projects will continue to operate despite the company appointing administrators after shareholders rejected Seven Group’s takeover bid.
Investors on Thursday overwhelmingly ignored the board’s advice to accept billionaire Kerry Stokes’ bid, and the company appointed McGrathNicol as voluntary administrators late in the day.
Seven Group may try to take control of Nexus’s assets anyway as a creditor, having provided a rumoured $115 million in bridge financing.
The nine subsidiaries of Nexus have not been placed into administration, and their board members will work with the administrators and Seven Group to secure funding for the operation of the Longtom project in Victoria and the Crux and Echuca Shoals projects in Western Australia’s Browse Basin.
“We are extremely disappointed that despite running a comprehensive process we were not able to secure a more favourable outcome for shareholders,” the Nexus board said in a statement.
Dissident shareholders chose the possibility of receiving nothing for their investments instead of the two cents a share Mr Stokes’ Seven Group was offering.
Activist shareholder Stephen Mayne, representing the Australian Shareholders Association, urged directors during Thursday’s meeting to step down, saying it was a rare example of a democratic expression of disagreement with a board.
Nexus’ shares were 5.9 cents when the $26.6 million bid lobbed on March 31.
They have since fallen to 1.3 cents, with the company’s market value shrinking to $17 million. Its shares have now been suspended from trade.
Nexus was worth more than $1 billion six years ago.
If Nexus cannot meet its financial commitments to its best asset, the Crux gas field in Western Australia, operator Royal Dutch Shell could seize it, leaving Seven Group with Nexus’s financial problems but no assets.
Nexus chief executive Lucio Della Martina said $400 million was needed to get out of trouble, which Seven would meet if the takeover had occurred.