Nexus Energy Says Board May Consider Sale of Company

By Angela Macdonald-Smith

Nov. 20 (Bloomberg) -- Nexus Energy Ltd., developer of the proposed Crux natural gas liquids project off northern Australia, said it may consider a sale of the company or an alliance, rather than offering a stake in the venture.

A process Nexus started last month to seek buyers for a stake in the Crux venture drew interest in a wider transaction, Michael Fowler, chairman of the Melbourne-based company, said today in an address to investors. The board ``will evaluate any serious proposals, as we always would with any such approach'' to maximize returns for shareholders, he said.

Nexus hired Deutsche Bank AG to manage a formal process for the sale of a stake in Crux after Mitsui & Co. scrapped a plan to buy an interest for $255 million. The Crux venture, which includes Osaka Gas Co., was due to approve the project for development this quarter to meet a scheduled start-up date in the first half of 2011.

``Maximizing value from the assets requires that we work off a secure financial base,'' Fowler said in the address, sent to the Australian stock exchange. ``If that means placing shares, to a new cornerstone investor, then subject to achieving an appropriate price we will also consider that option, either in conjunction with an asset sale or independently.''

Nexus Energy, which has slumped 76 percent in Sydney trading in the last six months, fell as much as 12 percent to 43 Australian cents and was at 44.5 cents at 12:14 p.m. local time. The decline compared with a drop of as much as 4.8 percent in the exchange's benchmark energy index.

Shareholder Dispute

The upstream, or exploration, part of the Crux gas liquids project may cost between $650 million and $700 million to develop, Nexus said in a presentation that was also sent to the Australian stock exchange. The company has previously estimated the total cost of the project at about $1.2 billion.

The venture is reviewing the strategy for securing a production ship to be used at the Crux project, Fowler said. Nexus had originally planned to use a vessel supplied by its second-biggest shareholder, Norway's Viking Shipping Ltd.

``The joint venture now considers that a final investment decision for Crux is unlikely to be achieved on that basis,'' Fowler said. In that case, the venture would negotiate an alternative offer from a supplier of offshore production vessels, he said.

Viking, which owns about 10.7 percent of Nexus, according to data compiled by Bloomberg, voted by proxy against all three resolutions to be tabled at today's shareholder meeting, Fowler said. The resolutions concern directors' remuneration, the re- election of Fowler and authorization for the issue of shares.

To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net