Pan Pacific independent directors reject Zeta offer

Pan Pacific independent directors reject Zeta offer as under-valuing company

By Jonathan Underhill

April 24 (BusinessDesk) - Pan Pacific Petroleum's independent directors have urged shareholders to reject a takeover offer from Zeta Resources, saying the proposal under-values the company and doesn't include a sufficient premium for control.

The offer of 5 Australian cents a share is below the fair value assessment of 7.5 cents to 12.5 cents from RSM Bird Cameron Corporate, which was hired to give an independent opinion of the proposal. The valuation assumes Zeta acquires 100 percent of PPP and includes a control premium. It says Zeta's offer includes a control premium that is lower than the average paid in such takeovers of between 27 percent and 35 percent.

Zeta, the ASX-listed investment group advised by Duncan Saville's ICM unit, currently owns 16.8 percent of PPP, whose assets include a 15 percent interest in the Tui field. NZ Oil & Gas, which has a 27.5 percent interest in Tui, this year moved to tighten its hold on another oil industry minnow by lifting its stake in Melbourne-based Cue Energy Resources to 48 percent. Cue owns 5 percent of the Maari oil and gas field, offshore Taranaki and adjacent to the Tui field, and an interest in the nearby Manaia prospect.

Saville links the various groups involved in the consolidation as he is also a director of NZOG and Zeta sold its 12 percent holding in Cue into the NZOG offer.

The RSM Bird Cameron report for independent directors Tony Radford, an erstwhile chairman of NZOG, and Allan Tattersfield values PPP's Tui field interest at between $15 million and $22.5 million, and the total value of its operations at between A$19.5 million and A$48.9 million. PPP also has net cash of A24.7 million.

Zeta's offer "does not reflect the underlying value of your Pan Pacific shares," Radford and Tattersfield say in their letter to shareholders. They intended to reject the offer in respect of their own shares. Tattersfield owns about 13.1 percent of the company, according to a recent ASX filing.

Shares of PPP last traded at 5.1 Australian cents and have slumped 49 percent in the past 12 months.

(BusinessDesk)

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