Melbana Energy Limited (Melbana) has announced its conditional intention to make a takeover offer (Offer) for 100 per cent of the ordinary shares in Metgasco Limited (Metgasco and Metgasco Shares).

On Monday 15 July Melbana advised that the Offer to Metgasco shareholders, if made, will be an all-share offer under which Melbana will offer Metgasco shareholders 4 fully paid ordinary shares in the capital of Melbana (Melbana Shares) for every 1 ordinary Metgasco Share held.

The implied value of the Offer consideration is $0.04 cents per share (Implied Value), which represents a premium of 48 per cent to the closing price of Metgasco Shares of $0.027 on 12 July 2019; and 35 per cent to the volume-weighted average price (VWAP) of Metgasco Shares from the 5 trading days since the date on which Metgasco announced the plugging and abandonment of the South Marsh Island 74 D-14 Well.

The Implied Value represents a discount to the 1 and 3-month VWAP of Metgasco Shares prior to the date of the announcement, which includes the period prior to the date of the SM74 D-14 Abandonment Announcement, of 4.1 per cent and 8.5 per cent respectively.

However, the Offer will be conditional upon a 50.1 per cent minimum acceptance condition; and the receipt of Melbana shareholder approval.

Additionally, M&A Advisory Pty Ltd (being a Metgasco shareholder associated with a director of Melbana, Andrew Purcell) can participate under the Offer (or a waiver of that requirement or confirmation shareholder approval is not required), together with certain other conditions, each of which are detailed in the release.

Melbana is expected to make the necessary ASX waiver application in respect of the condition regarding M&A Advisory’s participation under the Offer and, if necessary, convene a meeting of Melbana shareholders reasonably promptly so that, if the Offer is made, the condition will be satisfied prior to the close of the Offer.

As a response, Metgasco has thanked Melbana for its interest and states that it will now take the opportunity to confer with all key stakeholders.