Zeta's partial bid for NZOG trumped by smaller shareholder OGOG

ASX-listed Zeta Resources' play to seize control of New Zealand & Gas has hit a bump with the NZX-listed firm's independent directors saying they'll probably recommend investors reject it as too cheap, and are now considering a better rival bid.

Zeta Energy, a subsidiary of Zeta Resources, formally lodged its offer of 72 cents a share for 42 percent of NZOG's fully and partly paid shares it doesn't already own, subject to scaling. Zeta, which is advised by NZOG director Duncan Saville's ICM unit, signed lock-up agreements with H & G, Bermuda Commercial Bank, Pan Pacific Petroleum and UIL. It has also pitched its bid with the lure of another $50 million capital return to shareholders in the next six months.

The offer was a 15 percent premium to the stock's trading price before the bid emerged, however, NZOG's independent directors today said they expected to unanimously recommend the company's 11,053 shareholders reject the bid as lacking merit and being too cheap. A formal recommendation will be made in a target company statement to be sent to investors by no later than Sept. 22, and the directors said shareholders should take no action until then.

Complicating matters for Zeta is the emergence of an indicative partial bid by OG Oil & Gas which would trump its offer, which has a condition that no shareholder outside its circle holds or controls more than 10 percent.

OGOG, the oil and gas division of Ofer Global Group, plans to offer 77 cents a share for no more than 70 percent and at least a controlling stake. It currently holds about 4.3 percent of the New Zealand energy explorer.

"We think Zeta's stated focus on reducing NZOG's financial resources and reducing headcount is in direct conflict with enhancing shareholder value, puts the company at risk of losing its valuable foothold in New Zealand and does little or nothing to increase private-sector investment in the New Zealand economy," OGOG chief executive Alastair McGregor said in a letter to NZOG chairman Rodger Finlay. "In contrast, OGOG believes that NZOG's current resources should be retained and focused on responsibly pursuing attractive investment opportunities in the E&P (exploration and production) sector."

NZOG's independent directors are withholding judgement on the new offer until a formal bid is made and the proposal assessed.

The NZX-listed company's shares fell 2.8 percent to 68.5 cents

(BusinessDesk)