Brisbane, Sep 22, 2008 AEST (ABN Newswire) - Queensland Gas Company Limited (ASX:QGC)(PINK:QGSCF) today welcomed the conclusion by an Independent Expert that an agreed takeover Offer by QGC for all the issued shares of Sunshine Gas is 'fair and reasonable'. The Offer from QGC is also being unanimously recommended by voting Directors of the Sunshine Board in the absence of a superior proposal.
KEY POINTS
- Independent Expert Report concludes agreed takeover Offer for Sunshine Gas Limited (Sunshine) is 'fair and reasonable'
- The findings by the Independent Expert include that a merger of QGC and Sunshine would increase the new entity's scale and should improve its capacity to grow and benefit from market opportunities
- QGC invites Sunshine shareholders to accept into the 'fair and reasonable' bid as soon as possible
- QGC's Offer is unanimously recommended by Voting Directors of the Sunshine Board who intend to accept for all the shares they own or control by 29 September unless there is a superior proposal
- Sunshine's coal seam gas (CSG) reserves will increase QGC's equity-owned 2P (Proved and Probable) reserves by 469 PJ to 2,632 PJ and its 3P (Proved, Probable and Possible) reserves by 1,097 PJ to 6,780 PJ
QGC Managing Director Richard Cottee said today's 123-page Independent Expert Report (IER) provides Sunshine shareholders with further compelling reasons to accept the QGC bid of 20 August and be part of a coal seam gas powerhouse. The IER, produced by Deloitte Corporate Finance Pty Limited (Deloitte), was released by Sunshine along with its Target's Statement.
In further good news for Sunshine shareholders, the IER's findings are based on QGC's reserves of 1P (Proved), 2P (Proved and Probable) and 3P (Proved, Probable and Possible) gas, as certified at the time of the 5 September Bidder's Statement ─ prior to a significant upgrade on 17 September of QGC's reserves of 1P and 2P.
QGC is offering Sunshine shareholders the following alternatives:
1. Five QGC shares for every eight Sunshine shares; or
2. A$1.65 cash per Sunshine share and two QGC shares for every seven Sunshine shares. The following findings have been extracted from the Independent Expert Report:
- "Deloitte has estimated the fair market value of a Sunshine share, on a control basis, to be in the range of A$2.10 to A$2.80."
- "The Scrip Alternative being offered by QGC is mostly within the range of our estimate of the fair market value of a Sunshine share. The Cash and Scrip Alternative being offered by QGC is mostly above the range of our estimate of the fair market value of a Sunshine share. Accordingly, in our opinion the Offer is fair."
- "Shareholders are receiving a significant premium to Sunshine's share price prior to the announcement of the Offer. The consideration under the Offer includes a control premium. The high premium may reflect the fact that QGC may be able to realise additional strategic value from the assets of Sunshine, beyond that envisaged by our sum of parts valuation-"
- "Our valuation of a Sunshine share implies a 2P multiple range on a $/GJ basis of A$1.22 per GJ to $1.68 per GJ and a 3P multiple range of A$0.52 per GJ to A$0.72 per GJ. This is below the range implied by recent transactions in the CSG sector in Australia, such as between Origin and Conoco, and Santos and PETRONAS."
- "In our view the 2P and 3P multiples implied by our sum of the parts valuation of Sunshine is reasonable compared to the 2P and 3P multiples of recent comparable transactions, due to the fact that the recent transactions involved significantly larger reserves and contingent resources."
- "In the absence of the Offer or an alternative transaction, Sunshine shares may trade below the prices achieved since the announcement of the Offer, as our valuation of a Sunshine share on a control basis overlaps the valuation range for the consideration offered by QGC."
- "The Proposed Merged Entity will have increased scale. Cash flows from the Proposed Merged Entity's production should enable the Proposed Merged Entity to fund and accelerate its development and exploration programs."
- "The increased market capitalisation of the Proposed Merged Entity and enlarged shareholder base may attract additional analyst coverage and may enhance the share market profile of the Proposed Merged Entity. These factors may provide increased liquidity and greater trading depth than currently experienced by Shareholders and may also result in a positive re-rating of the shares in the Proposed Merged Entity. As a result of the increased market capitalisation, the Proposed Merged Entity may also have improved access to both debt and equity funds on possibly more attractive terms compared with those currently available to Sunshine."
- "The Proposed Merged Entity will have exposure to a more diversified portfolio of assets than Sunshine on a stand alone basis, with the addition of QGC's diversified portfolio of production, development and exploration assets; (and) longer total potential production profile due to the Proposed Merged Entity's larger exploration portfolio and resource base."
- "In our opinion, the Offer is fair and reasonable to Shareholders."
Mr Cottee said Sunshine shareholders who accept into the bid before QGC's Offer closes on 13 October 2008 will receive QGC scrip and an opportunity to be part of a dynamic and fast-growing integrated energy company.
"The conclusive findings of the Independent Expert, Deloitte, support our strong view that a friendly merger of Sunshine and QGC will stimulate a host of value-adding benefits for all the shareholders of a larger QGC," Mr Cottee said.
Sunshine Chairman James McKay said in the Target's Statement released to the ASX today: "Each of the Voting Directors intends to accept the Offer in respect of all of the Sunshine shares they own or control, in the absence of a superior proposal, within seven days from the date of this Target's Statement."
Contact
Information for Media:
Mr Hedley Thomas
General Manager
Communications and External Relations
Direct: +61 7 3020 9043
Mobile: +61 417 797 419
ASX Contact:
Mr Mark Anning
Company Secretary
Direct: +61 7 3020 9012
Information for investors:
Mr Ian Davies
Chief Financial Officer
Direct: +61 7 3020 9040
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