Medco confident about Novus' acquisition plan

P.C. Naommy, The Jakarta Post, Jakarta

Publicly listed oil and gas firm PT Medco Energy International has yet to make a decision on whether to raise its bid for the shares of Australian company Novus Petroleum Ltd and head off- its rival.

"We won't know the credibility of our rivals until we read their bidding statement," Medco president Hilmi Panigoro said on Friday after a meeting of Medco shareholders here.

Medco earlier offered to buy 90 percent of Novus shares on issue at A$1.74 per share, 35 percent higher than Novus' closing share price last week at the Australian Stock Exchange (ASX)

However, a consortium consisting of Novus' chief executive Bob William, and Hong Kong-based Crosby Capital Partners -- topped Medco's bid by three cents at A$1.77 per share.

In response Medco would now make one of three possible moves: maintaining its offered price at A$1.74 per share while reducing its planned acquisition of 90 percent, matching the rival offer but with different terms, or offering a higher bid, Hilmi said.

The acquisition plan would be fully financed from the company's US$250 million unsecured notes issued in May, and from operating cash in 2002 of around US$84 million.

Novus shareholders are scheduled to make a decision on the acquisition plan on Feb. 10, however, Hilmi said that the schedule might be delayed. "If either Medco or the consortium changes its decision within one week of the scheduled time, the deadline would automatically be extended by two weeks.

According to Hilmi, the acquisition would raise Medco's average production by 21 percent from 84,500 barrels oil equivalent per day (BOEPD) at present to 102,275 BOEPD, with gas contributions increasing from 17 percent to 26 percent.

He added that since the final decision would be made by Novus shareholders and not by management, he felt optimistic that Medco's bid would triumph.

Novus management rejected on Friday a A$326 million (US$253.6 million) offer from Medco, saying that the offer was inadequate and substantially undervalued.

According to a letter sent on Friday by Novus's chairman, David Blair, to the ASX the bid took place before the benefits of Novus's U.S. and Middle Eastern operations were reflected in its share price.