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ENN shares in trading halt, preliminary agreement over Santos
Posted on Tuesday, 15 May 2018 08:48
Speculation is mounting that ENN Ecological Holdings is on the verge of announcing a deal with Harbour Energy for the sale of Santos after the major Chinese shareholder was halted from trading in Shanghai citing a preliminary agreement. In the statement to the mainland bourse, the energy group revealed that while it has reached a tentative arrangement with the would-be acquiror, there are still major uncertainties and nothing more can be disclosed at this point. This cautious note about a possible major asset restructuring has not stopped the media from speculating the suspension indicates due diligence is over and an actual offer is ready to go. In the meantime, Santos said today it has not received a notification of any agreement between the suitor, Harbour, and its existing investor, ENN, or about any change in substantial holding in relation to its shares. At the beginning of April, the Australian oil and gas group confirmed the receipt of an unsolicited, non-binding, indicative and conditional proposal of USD 4.98 apiece, the equivalent of AUD 6.50, and, at the time, allowed due diligence. Today, it cautioned there is no certainty an offer will be made and advises its shareholders to refrain from taking action. A source with told the Sydney Morning Herald the ongoing discussions triggered the trading halt: "There is no ink on the paper yet but negotiations are proceeding in the right direction, although this doesn’t mean it’s a done deal." This person added: "Negotiations are still happening. There’s still every intention to work towards an agreement." Separately, Santos chief executive Kevin Gallagher, cited by the Australian Financial Review, told reporters due diligence has not flagged any issues and the process is very near the end now and “the rest is subject to confidentiality”. Harbour’s offer in April followed three other unsolicited proposals: 14th August 2017 with an indicative price of AUD 4.55 apiece; 22nd March (AUD 6.25); 27th March (AUD 6.37). The group’s latest approach included the possibility of ENN and fellow shareholder Hony Capital rolling over their existing equity into unlisted stocks of a special purpose company that will remain invested in Santos. © Zephus Ltd