UIL independent expert deems Strike takeover 'fair and reasonable'

Source: Energy News Bulletin | 13 November 2018

STRIKE Energy’s off-market tilt at UIL Energy has been deemed ‘fair and reasonable’ by the Independent Expert appointed by UIL and has subsequently completed the Target’s Statement for the all-scrip takeover offer.

Following the completion of the Target’s Statement and the independent expert’s judgement that the transaction is fair and reasonable, UIL directors have again urged shareholders to accept the offer and will now accept the offer for their own holdings. UIL’s board of directors hold around 25% of the company’s ordinary shares, which immediately takes the total acceptances of the offer to more than 30%. Strike announced an offer to shareholders of 0.485 strike shares for every UIL share.

BDO Corporate Finance and RISC were appointed by UIL as the independent experts to advise on the takeover offer. Adjusting for portfolio effects, RISC estimates a value range for the UIL assets of between A$6.8 million and A$24 million. A best estimate value from arithmetic addition of the portfolio is A$12.8 million.

The Independent Expert has assessed the fair market value of UIL Energy shares in the range of $0.0302 to $0.0981 per share with a best estimate of $0.0542 per share on a controlling interest basis, and has concluded that Strike’s offer is fair and reasonable, in the absence of a superior proposal.

Should the all-scrip offer go ahead, the two juniors will merge and create a larger entity with significant combined holdings across the Cooper and Perth basins.

The offer implies an indicative price for UIL of 7 cents per share and an indicative undiluted market capitalisation of A$16.1 million. It is at a 26.1% premium to UIL’s five day volume weighted average price of 5.5cps and 43.4% to UIL’s 30 day VWAP.

“Strike Energy is very pleased that the UIL Energy bid has been deemed fair and reasonable by UIL’s independent expert. Strike now looks forward to the UIL Energy directors accepting the offer,” Strike managing director Stuart Nicholls said.

“Strike has been working extremely hard to maintain uptime at the Jaws pilot as we progress towards the objective of commercial success. Jaws continue to trend in a positive direction and we look forward to updating the market as further progress is achieved,” Nicholls continued.

Strike Energy is the operator of the South Australian Jaws Project gas asset, with a 66.67% interest, Energy World Corp holds the remaining 33.33%.

The Jaws depressurisation has continued with gas flows from each well head moving from intermittent major pulses to continuous flow (25-50 million standard cubic feet per day) with regular bursts every few minutes.

Late last month the company was forced to shut down operations briefly following an earthing fault that caused a loss of power, however production recommenced a short time later.

The company reports that it is continuing to see “good productivity” from the coals as gas flows continue to build.

Strike was trading at 11.5cps. UIL’s share price was valued at 5cps.

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UIL independent expert deems Strike takeover ‘fair and reasonable’