The Seven Group has announced a proposal to acquire oil and gas company Nexus Energy.
Kerry Stokes, Seven Group's executive chairman, explained the purchase, saying "as we have stated previously, our strong balance sheet provides us with the ability to act on investment opportunities in appropriate areas that diversify and broaden our portfolio, including the gas and energy sector".
It has made an offer to purchase all outstanding Nexus shares for .02 cents per share, effectively replacing the majority of its unsecured debt funding financiers, Seven Group explained.
As part of the acquisition, it will also provide working capital for Nexus, and up to $40 million in bridge loan facilities.
The working capital is broken down into $120 million for Nexus' Longtom development, $60 million for its Echuha Shoals gas exploration, and $55 million on Crux make-good obligations, as well as $33 million for litigation settlement with Sedco.
"We believe the proposed acquisition of Nexus Energy is an excellent investment, provided there is an immediate injection of the agreed major capital in the next several weeks," Stokes added.
"The investment provide SGH with an opportunity to invest in a business with quality ass est and with strong growth prospects that will provide long term value. Realisation of the ultimate value of these assets will require substantial capital investment over time.
"This investment suits SGH's strategy to deploy capital in a sector in which Australia has a long term comparative advantage. Our proposal also ensures these assets remain in Australian hands."