On the heels of an off-market takeover offer from Samuel Terry Asset Management (STAM), aiming to increase the investment fund’s interest in Australia’s FAR Limited, one of FAR’s shareholders has repudiated the offer, claiming it undervalues the firm’s shares and does not take into account a contingent payment from the Sangomar deal.
At the end of January, FAR Limited confirmed the receipt of an off-market takeover offer from Samuel Terry Asset Management on behalf of Samuel Terry Absolute Return Active Fund for the acquisition of all the issued fully paid ordinary shares in FAR for $0.45 cash per share.
At the time, FAR noted that the offer had undervalued the firm’s shares in regard to FAR’s cash backing and the right to receive a $55 million contingent payment from the sale of its interest to Woodside in the RSSD project, as well as its existing oil and gas interests.
In its latest statement on Friday, FAR confirmed that it had received a letter from Meridian Capital International Fund (MCIF) on Thursday, rejecting the takeover bid offer made by Samuel Terry Asset Management.
The Hong Kong-headquartered investment firm, Meridian Capital International Fund, is a shareholder in FAR with a 19.28 per cent interest. Meridian explained its refusal of the takeover bid by saying: “MCIF rejects the offer at the offer price as being opportunistic and wholly inadequate. In particular, in MCIF’s view, the offer does not offer shareholders any benefit from the RSSD contingent payment.”
It is worth reminding that FAR previously received two takeover offers, which fell through, one by Remus Horizons and the other by Russia’s Lukoil in 2020 and 2021, respectively.
Preserving the value of RSSD payment
The investment firm also says it remains committed to its investment in FAR and suggested that FAR directors convene a shareholders meeting to consider a pro-rata distribution of all rights to the $55 million contingent payment resulting from the sale of FAR’s interest in the RSSD licences offshore Senegal – Rufisque Offshore, Sangomar Offshore, and Sangomar Deep Offshore – to Woodside, which FAR may potentially receive.
Meridian believes “that course of action or any similar arrangement approved by shareholders would help preserve the value of the RSSD contingent payment for existing shareholders on the relevant record date.”
The investment firm also adds that all other assets including FAR’s cash and oil and gas interests would remain within the company. In response to this suggestion, FAR is investigating whether this can be carried out in an appropriate way. In addition, FAR intends to provide an update to shareholders in due course, once this investigation is complete.