afr article

WestSide mulls revised $178m bid from Landbridge
PUBLISHED: 2 hours 3 MINUTES AGO | UPDATE: 1 hour 56 MINUTES AGO

WestSide mulls revised $178m bid from Landbridge
WestSide directors said they will “carefully consider” the bidder’s statement lodged by Landbridge. Photo: Glenn Hunt

Angela Macdonald-Smith


Queensland coal seam gas player WestSide is reviewing an increased $178 million cash takeover offer from Chinese port operator Landbridge, which has emerged as its largest shareholder after snaring a 19.9 per cent take through off-market purchases.

Landbridge late Thursday made a formal 40¢-a-share cash offer for WestSide, which has recently finalised a major agreement to sell gas from its Meridian SeamGas operation west of Gladstone to Santos’ GLNG venture. WestSide’s shares closed on Thursday at 33¢.

The privately-owned Chinese port and logistics operator has no other interests in upstream oil and gas production and its ambitions to take over WestSide has left some investors bemused.

WestSide directors said on Monday they will “carefully consider” the bidder’s statement lodged by Landbridge after the market close on Thursday and in the meantime advised shareholders to take no action on the offer.

They had previously dismissed an earlier tentative approach from Landbridge at 36¢ per share as “manifestly inadequate”, refusing to engage with the suitor on negotiations or to allow due diligence.

However, Landbridge has since acquired a sizable chunk of the company, buying shares from its former second-largest shareholder Energy Infrastructure Trust, as well as from founder and former chairman Angus Karroll, and from the Mitchell family, which runs a drilling business in Queensland.

It has become the largest shareholder, overtaking New Hope Corporation, which owns about 17.6 per cent.

Infrastructure Capital exits stake


WestSide director John Clarke, who is managing director of Energy Infrastructure Trust’s manager, Infrastructure Capital Group, on Monday said he played no part in the trust’s decision to sell its stake.

“This was a small investment for them and they sold for portfolio management purposes,” Mr Clarke said in a statement.

“I understand and accept that, but as a director of WestSide, my fiduciary obligation is to all WestSide shareholders and in that capacity I think shareholders should take no action with respect to Landbridge’s offer.”

WestSide operates the Meridian coal seam gas venture in partnership with Japan’s Mitsui, which owns a 49 per cent stake in the project. According to WestSide managing director Mike Hughes, Mitsui has been a strong supporter of WestSide’s efforts to commercialise its gas, including the long-term gas sales contract to GLNG.

Landbridge, which is being advised by PricewaterhouseCoopers, has given few clues as to its intentions for WestSide should it win control. But chairman and billionaire Ye Cheng said the company “looks forward to progressing the development of WestSide’s coal seam gas projects and managing the inherent risks involved.”

He said Landbridge was “encouraged by the strong market support it has received for its offer”, which he described as providing “compelling and certain value for WestSide’s shareholders at a time when there is significant illiquidity in WestSide shares and uncertainty over the funding and development pathway for WestSide’s assets”.

Landbridge ‘hopeful’


The Chinese company said it “remains open” to holding constructive discussions with the WestSide board and “remains hopeful” the board will recommend its offer. It added it considers the chances of a rival bidder emerging with a higher offer to be “low” given the major interest it has already secured.

However, other sources suggest Mitsui may emerge as a defender for WestSide against the hostile Chinese bid, rather than allow Landbridge to effectively take control of gas production at Meridian SeamGas.’