Russia’s PJSC Lukoil has made a takeover bid for FAR Ltd. for $220 million (Aus.). Notable is FAR’s 15% interest in the Rufisque, Sangomar and Sangomar Deep (RSSD) holdings (including Sangomar oil field) offshore Senegal.
The offer, pitched at $0.22/share (Aus.), is $10 million (Aus.) more than the late 2020 incomplete all-cash takeover offer from Remus Horizons PCC Ltd. FAR has not received a binding offer from Remus.
Lukoil said its deal represents higher value for FAR shareholders than the sale of FAR’s RSSD interests to ONGC Videsh Vankorneft Pte Ltd. for US$45 million offered mid-November 2020 and subsequently pre-empted on the same terms by RSSD operator Woodside Energy Ltd. in December.
In the absence of a better offer and no further word from Remus, FAR executed a sale and purchase agreement with Woodside for the assets in late January 2021. However, the deal still required shareholder approval which would have been sought at a shareholder meeting mid-February.
That meeting has been postponed to clarify the Lukoil offer which, at this stage, is a conditional non-binding indicative proposal. Lukoil said its proposal is conditional on obtaining minimum acceptances of 50.1% of FAR shares and a FAR board recommendation.
Lukoil does not believe the deal would require Australian Foreign Investment Review Board approval. It intends to fund the transaction from available internal cash reserves and said any formal binding offer would not include financing conditions.
The company said it holds a “deep understanding” of the RSSD project from due diligence completed prior to its bid to acquire the Cairn Energy’s 40% interest in the project in April 2020 for US$400 million. That bid was pre-empted by Woodside in August 2020 and completed in January 2021.
Lukoil said it is open to providing reasonable financing support to enable FAR to come out of default in relation to the RSSD project cash call defaults once its proposal is unconditional.
FAR has previously said it is in default to the tune of US$43.9 million for January and February 2021 cash calls. The company has until early June to remedy the defaults or risk losing all its interest in the RSSD project.
Lukoil’s offer for FAR will need to be made unconditional well in advance of the Woodside long-stop date for its sale which is currently set for June 2021.
FAR said it will provide further information on the Lukoil proposal prior to the yet-to-be-announced date for the rescheduled shareholders meeting to consider all offers.