Seven pumps more into Nexus
KERRY Stokes’s Seven Group has agreed to substantially increase a credit line to collapsed Nexus Energy.
KERRY Stokes’s Seven Group has agreed to substantially increase a credit line to collapsed Nexus Energy to allow it to push ahead with the development of its two key gasfields.
After securing shareholder backing for its $180 million takeover of Nexus last month, Seven has increased the size of a credit facility from an initial $30m to a new line of credit amounting to $165m.
The increase was required “to allow for significant capital expenditure commitments” in relation to Nexus’s two key gasfields at Longtom and Crux.
Nexus took a 15 per cent stake in the Crux gasfield through a 2012 deal with Shell. A recent assessment of Nexus’s operations by independent expert Lonergan Edwards said its stake in the WA-based Browse Basin field would fetch between $40m and $80m.
The company’s other asset, the productive but troublesome Longtom gasfield in Bass Strait, is valued at up to $80m.
Mr Stokes’s Seven Group is planning to use Nexus to lead its push into the oil and gas sector.
In August, Nexus creditors, headed by the Stokes-controlled Seven, approved a $180m deed of company arrangement (DOCA) for Seven to buy Nexus.
The deal leaves nothing to Nexus shareholders, who in June voted down a better deal and sent the company into administration.
Under the Seven offer, trade creditors and employees are set to receive all their entitlements and junior noteholders will get 74.5c in the dollar.
That deal valued Nexus’s equity at $27m, with the rest to be spent on debt and other liabilities. This included $60m of senior debt and $91m to noteholders.
Still, with Seven having bought all of Nexus’s senior debt and most of the junior notes and providing bridging finance for Nexus, it has been able to control the administration process as it had warned it would if shareholders voted down the previous deal. Nexus administrator McGrath Nicol said a court hearing had been set down for October 31 to determine whether the deed of company arrangement could move ahead.
Separately, McGrath Nicol said an agreement had been reached with drill rig operator Sedco Forex over a claim brought in the Federal Court in relation to an alleged breach of contract. The claim had initially been for $80m, but this was later settled for $30m.
Earlier this year, Mr Stokes said the media and resource investment group’s strong balance sheet provided the ability to act on investment opportunities to diversify its portfolio. However, he added that the realisation of the ultimate value of the Nexus assets would require “substantial capital investment” over time.