anzon investors sit on selloff windfall

Anzon investors sit on sell-off windfall

Nigel Wilson, Energy writer | October 08, 2007

WHATEVER the wash-up concerning the future of Anzon Australia, some investors are going to make a lot of money.

Anzon Australia is owned 53 per cent by London Alternative Investment Market-listed Anzon Energy, which pumped around $6 million into the initial float of Anzon Australia.

That investment is set to be worth around $400 million if Anzon succeeds in selling itself to the highest bidder.

While much interest is centred on a creeping share market raid by Nexus on Anzon and the possibility of a merger, Anzon founder Steve Koroknay remains committed to continuing the process begun earlier this year which has resulted in a shortlist of four unidentified groups looking at Anzon's data room with the aim of delivering a tender sale.

But Koroknay is a realist. And that means he won't rule out Nexus winning.

The four on the shortlist are thought to be Santos, Origin Energy, AWE and ARC Energy but Nexus has put the view that an Anzon/Nexus merger makes sense in creating a substantial independent Australian energy company with complementary assets, particularly for the eastern states energy market.

Koroknay says there is no bad blood between him and Nexus chief Ian Tchacos even though the market has tended to play up the acrimonious and ultimately unsuccessful $171 million all-scrip bid by Anzon for Nexus last year.

That left Anzon with a 12.4 per cent stake in Nexus - which has clearly irked Mr Tchacos.

The possibility that an unwelcome player might emerge on Nexus's register is one he's prepared to repel, which is the defensive part of the Anzon share raid strategy.

Nexus has now picked up 16.4 per cent of Anzon and the latter's share price has hit an all-time record of more than $1.81, valuing the company at more than $750 million. Koroknay says that even at this price there are others around that value Anzon more.

Anzon is the originator and now 40 per cent owner of the Basker/Manta/Gummy development in Bass Strait.

Basker is a field that no one in Gippsland Basin operator Esso Australia, with the exception of Koroknay, thought could be made to work.

But an innovative plan which saw initial development of an oil leg using an FPSO and a shuttle tanker to refineries, and subsequently confirmation of a substantial and market-significant gas field, has created an attractive asset.

Certainly Reg Nelson of Beach Petroleum believes that theory, having picked up half of the project as part of a play to capitalise on the rising gas prices in the nation's southeast corner.

Anzon and Beach have subsequently each sold down their interests to Japanese giant Itochu, which has paid $226 million for a 20 per cent stake. Tchacos says there are synergies between Nexus, with its 100 per cent owned Longtom gas project in Bass Strait, and the Basker/Manta/Gummy project, which would result in shareholders' interests being strengthened because of Nexus's operations in the Timor Sea.

Tchacos says there is a compelling case for a merger, although he concedes Nexus's timetable might not suit Koroknay, who has indicated he wants to be clear of Anzon by early next year at the latest.

According to the Nexus chief, key benefits to shareholders of both companies would include creation of a $1.5 billion ASX-listed mid-cap oil and gas company that would be included in the S&P/ASX 200 index.

The merged company would have a unique profile of production and growth projects with complementary asset positions in the Gippsland Basin creating potential for synergies.