Seven Group Holdings has extended a $165 million loan to Nexus Energy for two weeks as it continues to seek regulatory approval for the troubled takeover of the debt-laden oil and gas explorer.
The extension comes as the completion date of a deed of company arrangement for the takeover is also extended to the same date, November 14. The date was originally Friday, October 31.
The takeover has been mired in controversy from the start, partly because Seven Group chief executive Don Voelte was previously the chairman of Nexus. Also troubling Nexus shareholders is the near-zero value Seven has placed on Nexus shares. An initial 2¢ per share offer for the equity was blocked by shareholders, causing Nexus to be placed in administration, and Seven has now agreed with administrators McGrath Nicol on a takeover that places zero value on the shares.
But the takeover arrangements have yet to be approved by the Australian Securities and Investments Commission.
Several shareholders, including the Nexus Battle group of shareholders representing about 14 per cent of the register, have complained to the securities regulator that the takeover is unfair. They argue that Nexus's assets, including its stake in the Crux gas venture led by Shell, are being undervalued by Seven.
However a new independent valuation of Nexus released by McGrath Nicol on Friday finds that the transfer of Nexus shares to Seven in exchange for no value to shareholders "does not unfairly prejudice shareholders".
The valuation by Lonergan Edwards considers two scenarios for its valuation of Nexus. In the scenario which McGrath Nicol said was more relevant, which takes into account Nexus's funding difficulties and risks, the expert values Nexus shares at between negative 14.5¢ and negative 9.5¢, with a mid-point at negative 12¢.
Even in the scenario where ongoing funding for Nexus is assumed to be available, the mid-point valuation range for Nexus is negative 1.8¢ per share, with a high end range of 2¢ per share, the price of Seven Group's initial offer for Nexus's equity.
Under the deed of company arrangement, noteholders in Nexus would be paid 74.5 per cent of the amount owed to them. Drilling rig owner Sedco Forex International would receive $30 million as settlement for an outstanding matter with Nexus, while other creditor claims should be paid in full.
ASIC has asked Nexus Battle to give feedback on the independent expert's report by November 5, as it continues to consider whether the deed of company arrangement can take effect.
