24 Oct 2012

Buyout bid lifts share price for oil company

7:28 am on 24 October 2012

Shares in L&M Energy rose 37% on the NZX after it received a full takeover bid from one of its directors and major investors.

The stock closed at 7.4 cents on Tuesday, up 2c.

Geoff Loudon has formed New Dawn Energy, which is offering six Australian cents a share for the Wellington-based oil and gas explorer.

L&M Energy undertakes oil, gas and coal seam gas exploration across New Zealand.

Earlier this year the company reported a loss of $2.1 million for the six months to June due to higher operating costs.

The company is controlled by three major shareholders, who hold 69% of the energy explorer.

Mr Loudon has a 23% stake in L&M Energy and says the company will shortly need more capital, but other major investors are keen to get out.

He says his offer is a 43% premium to L&M Energy's closing share price in Australia last Wednesday, and values the company at $A45 million.

So far, 71.71% of the company's shareholders have accepted the bid, unless a higher one is received.

Mr Loudon's takeover vehicle, New Dawn, needs 90% of the shares to take L&M Energy private.