- Perth company Liquified Natural Gas (LNG) has been offered $114.9 million in cash for a full buyout
- The Australian company said on Friday it entered a bid agreement for 19.6 cents per share proposed by Singaporean company, LNG9
- The offering represents a 72 per cent premium to LNG’s last closing price of 11.5 cents per share
- LNG will need its shareholders to vote by 90 per cent in favour of the offer for it to go ahead
- The company has recommended the deal, describing its desire to remain in an “intense” energy market
- Shares in LNG have steadily decreased 76 per cent over the last year, closing on last Friday at 11.5 cents each
Perth based company Liquified Natural Gas (LNG) has been offered a takeover bid from a Singaporean company.
Announced to the market on Friday, the West Australian company told shareholders it was being offered 19.6 cents per share for full ownership — a total of $114.9 million.
This offer represents a 72 per cent premium to LNG’s latest valuation of 11.5 cents per share.
The offer was proposed by Singaporean-based LNG9. The company deals frequently with heavy-hitting Asian gas importer, Crown LNG.
LNG9 currently operates through six offices around the world, managing two active processing sites.
The transaction has been offered completely through cash.
Shareholders in LNG may see the 72 per cent premium offer as a bailout for the company, as its share price has steadily declined 76 per cent over the past year. In early March of 2019, LNG’s shares were priced at 49 cents each.
In the market announcement, LNG9 said it plans to “potentially take the company private”.
Wall Street Capital Corporation has already flagged itself as a lender for LNG, agreeing to provide bridge financing in order to meet working capital requirements and transaction costs.
LNG has already entered a bid implementation agreement with LNG9 for the deal, with the Australian company recommending shareholders vote in favour of the offer.
LNG also noted in its Friday press release that available funds are “insufficient” to sustain operations past this quarter — even with the Wall Street Capital leverage.
The Australian company even went as far to state: “If the offer conditions are satisfied or waived, shareholders who accept the offer avoid the risk of LNGL entering administration or liquidation, which event would introduce risk of significant value loss[…]”
The company also noted on Friday that the liquified natural gas market remains “intense”, with the industry being oversupplied with no guarantee for its shares to increase in value.
No representatives of LNG gave comments on last week’s press release.
For the takeover to succeed, LNG will need 90 per cent of its shareholders to vote in favour.
Shares in LNG on the Australian Securities Exchange closed at 11.5 cents each on Friday.