Cooper Energy Limited (ASX: COE)
ASX RELEASE 9 OCTOBER 2008
COOPER ENERGY RESPONSE TO INCREMENTAL TARGET?S STATEMENT
The Directors of Incremental Petroleum (Incremental) have failed to offer their shareholders any alternative to the compelling takeover offer from Cooper Energy.
In its Target?s Statement released yesterday, Incremental told shareholders to reject Cooper?s offer.
Instead, Incremental shareholders are being asked to believe a valuation of up to $4.18 per Incremental share.
Incremental?s shares last traded at 87 cents ? less than a quarter of this valuation.
Cooper is offering Incremental shareholders a choice of 50 cents cash plus 1.9 Cooper shares or 3.1 Cooper shares for each of their Incremental shares.
Cooper Energy Chairman Laurie Shervington said that Incremental shareholders should question their directors? reliance on the Target?s Statement valuation.
?If you believe in this valuation, you?ll believe there are fairies at the bottom of the garden,? said Mr Shervington.
?As an Incremental shareholder, Cooper Energy is very keen to see improved value for shareholders.
?Cooper?s plan for delivering a strong value kick to our fellow shareholders in Incremental is to merge the companies, combine production, diversify portfolio risk and apply our strong cash reserves to the rapid development of the assets of the merged group.
?We think this makes sense for Incremental shareholders yet the company?s Board is clinging to the notion it can do this under its own steam.
Incremental has admitted in the Target?s Statement that it has net cash of just A$1.3 million but also has funding requirements on the Selmo field alone of US$29.6 million.
?That?s not a realistic strategy for adding value within an acceptable timeframe for shareholders, especially in a market environment where Incremental will find it extremely difficult to raise money.?
Cooper?s offer represents a substantial premium and falls within the 25-40% implied premium range in which, according to Incremental?s own expert, takeover transactions in Australia are typically completed.
?Incremental shareholders should apply a reality check to the valuation generated by the Company?s expert. It is out of touch and unrealistic,? said Mr Shervington.
?We believe that if our bid wasn?t on the table, Incremental shares would fall further.
?Incremental shareholders should ask their directors why they reject our offer yet are not interested in offering any alternative.
?This is a very difficult market, the tills are closed and Incremental simply doesn?t have the cash on hand to develop its assets to full potential in a meaningful timeframe.
?Cooper has $65 million in cash reserves, strong Australian production and a quality, diverse portfolio of exploration, appraisal and development assets.
?As an Incremental shareholder, we believe substantial value will flow rapidly from combining the asset portfolios of the two companies.
Mr Shervington said the Incremental Target?s Statement contained no fresh information that would persuade its shareholders, including Cooper, to believe the status quo represents a good value proposition.
?Saying ?No? to Cooper but not offering shareholders an alternative proposal shouldn?t be an option for Incremental?s directors, especially given current market conditions,? he said.
?Our Offer represents a compelling opportunity for Incremental shareholders and we look forward to welcoming them to join us in maximising the value of their assets.?
Cooper has identified a number of material defects in the Incremental Target?s Statement that will be addressed in the next week.
FURTHER ENQUIRIES
Cooper Energy is being advised by Euroz Securities Limited (financial adviser) and Minter Ellison (legal adviser). For further enquiries please contact:
Cooper Energy Limited Greg Hancock +61 8 9368 5833
Executive Director
Euroz Securities Limited Karl Paganin +61 8 9488 1433
Executive Director
Austen Fresson
Associate Director
For media enquiries please contact:
Read Corporate Nicholas Read Corporate +61 419 929 046