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NORTHERN Energy Corporation Limited (NEC) has rejected New Hope Corporation Limited’s (NHC) $192.6 million takeover offer, citing the proposal as ‘undervalued’.
Managing director Keith Barker says the company could not reveal what an appropriate price for NEC shares would be, after rejecting the $1.50 per share offer.
"It's materially undervalued the value of the company, but we're not about to quantify that at this point ," he says.
Barker says the offer is opportunistic and taking advantage of share price weakness based on a variety of factors.
"Over the last few months we've had uncertainty with the resource profits tax, the Federal election, and speculation about the approval process for the Maryborough mine."
Chairman Chris Rawlings highlighted the underlying value and growth potential of Northern Energy’s coal portfolio, along with long-term development assets.
“The board considers this offer inadequate – this offer has come as the company is on track to begin coking coal production at Maryborough in 2012,” he said in a statement.
“We are also currently testing several expansion options at Maryborough and we will provide the market with these updates in due course.”
New Hope chairman Robert Milner, commented last week that the $1.50 per share proposition would allow greater access to capital for NEC, which is well-needed given the company’s project plans.
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