New Fletcher Energy bid revealed

By Phil Boeyen, ShareChat Business News Editor

Tuesday 27th February 2001

Fletcher Energy (NZSE: FEG) shareholders are being offered extra cash in a new bid for the company by a group called Peak Petroleum.

The new bid is similar to that offered by Shell and Apache, but increases the cash offer from US$3.34 to US$3.70.

Peak Petroleum was founded by private energy company Greymouth Petroleum Mining which owns the Motoroa oil field in Taranaki.

The principal New Zealand consortium members are an FR Partners private capital group and the Guiness Peat Group, who together are committing over half of the equity capital required for the bid.

Other consortium members include leading NZ and overseas institutional investors in Fletcher Energy.

Greymouth's chairman, Mark Dunphy, says the bid for FEG was sparked by interest in the New Zealand energy assets that Shell is obliged to sell to meet its Commerce Commission conditions.

"Greymouth's continuing investigations led it to the conclusion that the Shell bid significantly undervalued Fletcher Energy's assets. Other respected organisations and individuals, some of whom are existing Fletcher Energy shareholders, have joined Greymouth in its bid to keep these assets in independent ownership."

Mr Dunphy says the activities of the Greymouth company do not form part of the current proposal from Peak Petroleum to acquire Fletcher Energy, although Greymouth has committed to subscribe for a shareholding.

Peak is also playing the nationalistic card in its bid.

"Our proposal is not only a better deal for Fletcher Energy shareholders, it is a better deal for the country," says Mark Dunphy.

"It preserves valuable resources, skills and jobs, ensures competition in the oil and gas industry, and a continuing opportunity for New Zealanders and overseas investors to invest in a major New Zealand oil and gas company.

Mr Dunphy says a public float of Peak is planned, and current Fletcher Energy shareholders can get a guaranteed allotment.

Fletcher Challenge says Peak's proposal is subject to a number of conditions, including finance and due diligence on the assets and liabilities - a process it says will take at least several weeks.

However shareholders are due to vote on the Fletcher separation process next week, and the Shell and Apache offer may lapse if not completed by March 23rd.

Fletcher Challenge says before it can respond to the Greymouth proposal it requires further information.

It says it will then evaluate the offer based on overall value and fairness to all shareholders, certainty of receiving that value on closure, the impact of a timing delay, and the ability of Greymouth to deliver on Energy's ongoing obligations.

Fletcher chairman Rod Dean yesterday said the company had not been advised of the international investors rumoured to be behind Greymouth.

"The identity and credentials of any backers are vitally important in a deal of this size (nearly $4.6 billion), together with price and timing."

Peak Petroleum says it has been in communication with Fletcher Challenge since early December and plans to make an unconditional bid by March 23rd.

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