In March this year, Seven Group Holdings bid for a takeover of Nexus Energy Limited. Nexus Energy is a gas and oil company based in Australia. The company is buried in debt. On the other hand, Seven Group operates in media and industrial service sectors. The bid price was $26.6 million and asking price per share was 2 cents.
Kerry Strokes, the chairman of Seven Group said, “We believe the proposed acquisition of Nexus Energy is an excellent investment, provided there is an immediate injection of the agreed major capital in the next several weeks.” But 58% stakeholders of Nexus Energy are against the takeover and for the deal to fall over, 25% of total stakeholders need to vote it down.
Seven Group however had a backup plan. The company made it clear that if the deal is voted down, it will not extend bridging finance anymore. Then Nexus will have to pay off the debt Nexus board would need to be replaced by voluntary administration. Seven Group would then attempt to procure all shares of Nexus for nil.
But as most shareholders voted down the proposal of the takeover, Nexus Energy Ltd. went into voluntary administration.
Previously the Australian Shareholders Association (ASA) didn’t take any stand on this situation. However, a source said stakeholders of Nexus Energy had received a takeover valuation from the ASA which further indicates insolvency might be on the cards.
The company is currently in the hands of the administrators. This clearly means shareholders are on the back seat and creditors are on the front seat. The Seven Group is the biggest creditor of Nexus Energy.
Nexus’s administrators said their immediate priority is to take hold of the assets of Nexus Energy and then assess its actual financial condition. One of the partners of the firm called Tony McGrath said, “the administrators will be working with all key stakeholders, including employees and regulatory agencies to ensure the trading operations continue.”
Nexus Energy’s share was trading at $1.62 in last December. But then its stock value fell down as revenue dropped. When the company was suspended from trading, its share price was $1.3 and market valuation was only $17 million. But 6 years back, the company was worth $1 billion.
As for the stakeholders, Nexus board published a joint statement in which it was said, “it was extremely disappointed that despite running a comprehensive process we were not able to secure a more favourable outcome for shareholders.”
It seems there’s nothing for the shareholders other than consolation.
