Buru Energy agrees to takeover proposal
Buru Energy has agreed to a takeover proposal from private company Arenite that could reduce Buru's stake and programs in the onshore Canning basin of northwest Western Australia.
MELBOURNE, Apr. 22 -- Buru Energy Ltd., Perth, has agreed to a takeover proposal from private company Arenite Pty. Ltd. that could reduce Buru's stake and programs in the onshore Canning basin of northwest Western Australia.
Arenite offered 25¢ for each Buru share and 2.5¢ for each Buru option. This would give Buru's shareholders and option holders a premium of 32% and 79% respectively over the 30-day and 3-month volume-weighted average price of its stock.
Buru's highly publicized strategy of using its blanket permit coverage of the Canning basin to evaluate the region appears to have suffered from the downturn in market conditions, including low oil price. Hence the original exploration program across the isolated region became much riskier. Many prospects, even if blessed with a successful discovery, are now considered uneconomic.
Areniteich is associated with Buru Chairman Eric Streitberg, who stepped aside to avoid any conflict of interest. Areniteich plans to use Buru's cash reserves of $79 million (Aus.) to fund the $41.3 million (Aus.) payment to shareholders. Buru would be delisted.
Arenite will review Buru's business that could lead to relinquishment of the Canning permits and a renegotiation of existing commitments plus recapitalization through alternative sources of funding.
At the moment Buru has a $40 million (Aus.) commitment to aluminium company Alcoa and work commitments with the Western Australian government of $137.9 million (Aus.) over the next 5 years, including $6.5 million (Aus.) worth of seismic surveys in 2009.