lion to spin off cooper basin

1 June 2004 The Manager Australian Stock Exchange Limited 10th Floor 20 Bond Street SYDNEY NSW 2000 Reorganisation Proposal – Directors’ Recommend Spin Off of Entek Energy Lion proposes to transfer its interest in its Cooper Basin exploration tenements to its recently established 100% subsidiary Entek Energy Ltd (Entek), and then float Entek as an independent ASX-listed company. The proposal has these objectives: (a) To enable Lion to focus on cash-generating activities in Indonesia and its interest in the exploration tenements in Indonesia. (b) To use Entek as the vehicle to unlock the full value and potential of the Cooper Basin exploration tenements. (c) To enable Lion shareholders to benefit from both of the above. The proposal is subject to obtaining Lion shareholders approval, and to Entek raising $3.5 million in cash by a public offer under a prospectus with the new shares being admitted to quotation by ASX. Entek will use the net proceeds raised to fund future exploration of its tenements, and to qualify for admission to ASX’s official list. If the proposal proceeds: (i) Lion shareholders (on a nominated record date) will enjoy a priority right to subscribe for Entek ordinary shares under the Entek prospectus subject to Entek being able to meet ASX’s shareholder spread requirements. (ii) Entek will issue to Lion a total of 22,000,000 ordinary shares fully paid, of which shares Lion will then distribute 17,800,000 to persons who are Lion shareholders on the nominated record date. In legal terms, that distribution will effect an equal reduction of Lion’s share capital. Lion will retain for itself 4,200,000 of the Entek shares. (iii) Holdings of shares in Lion will not otherwise be affected. (iv) The exercise price of existing 20 February 2005 options to subscribe for Lion ordinary shares will reduce from $0.025 each to $0.0225.
Lion Energy Limited (ACN 000 753 640)
Suite 33, 168 Melbourne Street, North Adelaide SA 5006
Tel: (08) 8239 2666 Fax: (08) 8239 1744 Email: [email protected]
For full details, please see the Chairman’s Letter, Notice of Meeting, Proxy Form and Explanatory Memorandum that accompany this letter and that are soon to be sent to Lion shareholders. The Entek Prospectus is expected to be lodged before the meeting is held. Yours faithfully, G Mercorella Chairman