Takeover in doubt as Genex share price tumbles

An underground loader at the Genex project. Picture: Linda Le

There is a growing expectation that the buyout proposal by Atlassian co-founder Scott Farquhar for Genex Power could dissolve as the target’s share price has fallen 10 per cent in the past five days.

The last communication that Genex had to the market about the buyout proposal from Mr Farquhar’s Skip Essential Infrastructure Fund and Stonepeak was that engagement with suitors was ongoing.

The pair offered 25c per share for the company in September, subject to due diligence, and Genex shares closed at 18c on Wednesday. Observers expect the most likely outcome is that the bidders front up with a binding offer for the energy firm but at a lower price.

The Australian reported last month that Genex’s main project, the Kidston renewable energy hub in far north Queensland, had suffered tunnelling disruptions.

The hub includes a 250MW hydro project, 50MW solar farm, a further 270MW solar development and a 150MW wind farm. Construction at the hydro project suffered flooding in underground tunnelling on September 24, Genex said, due to an unexpected geological issue.

The development remains on track to come online in the second half of 2024 and the company said there was no increase in the project cost.

Skip holds 19.9 per cent of Genex, but sources believe other companies remain around the hoop as suitors at a lower price should the Skip proposal stumble.

Not helping matters on Farquhar’s front is that Atlassian shares fell 23 per cent last week on the back of disappointing quarterly results, and he remains a major shareholder.

EnergyAustralia has signed a 10-year deal to buy power from Kidston with two further options available including control of the plant’s operational and dispatch rights. Genex, advised by Goldman Sachs and Gilbert + Tobin, has received a $610m loan from the Northern Australia Infrastructure Facility and counts Japan’s J-Power as an investor.