Geodynamics plans takeover offer for KUTh Energy

Sep 18, 2013 - Australian geothermal energy firm Geodynamics Ltd (ASX:GDY) said today it planned to take over sector firm KUTh Energy Ltd (ASX:KEN) in a bid to expand its project portfolio and achieve favourable synergies.

The company will make a conditional off market takeover offer for 100% of KUTh that would value the target at some AUD 2.65 million (USD 2.5m/EUR 1.9m). More specifically, Geodynamics intends to offer one share for every five and a half KUTh shares, valuing the latter at AUD 0.02 per share.

Once the buy is completed, the target company's shareholders will hold 6.12% in Geodynamics. The combined business is estimated to reach a pro-forma market capitalisation of around AUD 47.5 million and to have AUD 42.2 million in cash. “The combination of the two groups will allow equipment, knowledge and capability to be shared effectively across the portfolio providing significant benefits through combined drilling campaigns, shared technical resources and cost efficiencies,” said Geodynamics CEO Geoff Ward.

KUTh Energy has several geothermal power projects in the Pacific Islands, including a production licence for the Takara geothermal project in Vanuatu. Here Geodynamics sees the opportunity to achieve substantial synergies as regards to its own Savo Island geothermal project in Solomon Islands, it said. KUTh has also filed licence applications for projects in Papua New Guinea and Fiji.

Geodynamics said that as part of a takeover bid implementation agreement struck by the two parties, KUTh’s board is to recommend the offer to the target’s shareholders if there is no superior proposal. Shareholders that control some 36.7% in KUTh already plan to accept the takeover proposal, the offeror noted. The offer needs the thumbs-up by KUTh shareholders holding at least 90% in the firm.

(AUD 1 = USD 0.935/EUR0.700)

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