The Northern Energy Corp's board has unanimously rejected the $193 million takeover offer from New Hope Corp. It has described the bid as low ball and opportunistic after Merril Lynch advised them that the $1.50 per share offer undervalued the company and did not reflect its strategic value.
The Chairman of Northern Energy Corp Chris Rawlings said yesterday that New Hope's assertion that the company was too small to fund the eventual development of its bigger Surat basin projects such as the thermal coal deposit Elimata was incorrect.
Mr Rawlings said that the board met yesterday and had considered the offer inadequate. He said that the offer came as the company was on track to begin coking coal production at Maryborough in 2012. They were also testing expansion options there of which updates would be provided to the market in due course.
The New Hope Chairman Robert Millner said that Northern Energy Corp would need close to $660 million in terms of development funds for these expansions and its market capitalization was less than $200 million. This is where New Hope with its significant capital of $ 2 billion will be able to help.