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Nexus investors angry at takeover offer

Dozens of unhappy Nexus Energy shareholders have turned up to a meeting in Melbourne to vote on a 2¢-a-share takeover offer from Seven Group Holdings, with one accusing the media group of "standover tactics" in the way it has sought to persuade investors to accept the offer.

Proxy votes cast ahead of the meeting on Thursday have already doomed the takeover deal to failure unless enough shareholders turn up and change their vote, Nexus has advised.

Shareholders risk receiving nothing if the deal collapses, as the oil and gas junior is likely to be placed in administration, Nexus managing director Lucio Della Martina reminded shareholders at the meeting.

Mr Della Martina reiterated that the board had carried out an "extensive" review of potential options for asset sales and funding but had not been able to secure an alternative proposal to Seven's offer, which has been deemed "fair and reasonable" by an independent expert.

But many investors are angry at the low price of the offer for the equity of the debt-laden company, and at the role played by their former chairman Don Voelte, who is chief executive of Seven Group.

"I'd rather get nothing. The longer you think about it, it's the principal of the thing. I'm hoping this gets enough interest that things change," Nexus shareholder Sean Dooley told Fairfax Media just before the meeting got under way. "It's standover tactics."


"I got here and they asked me if I wanted to change my vote. I told them no," Mr Dooley said, adding he had been a shareholder for 30 years but never bothered turning up to a meeting until this one.

The comments were echoed by another Nexus shareholder Graham Garlick: "I reckon it smells," he said.

"The board haven't been straight with the shareholders. Credibility is important and if that disappears then the confidence in the market fails."

Nexus halted its shares from trading early Thursday ahead of the vote, which looks set to sink the contentious deal.

During the meeting a string of shareholders took the microphone to accuse the board of failing to adequately explore funding options - like a capital raising - that could have shored up the companies dismal financial position.

The board was also accused of failing to properly inform the market about the extent of the company's financial woes, which includes liabilities from a failed drill-rig contract and other legal liabilities.

One shareholder said, Nexus had gone from not being in need of funding to almost bankrupt in a few months, with "nothing on the way to say we are heading this way".

Australian Shareholders' Association spokesman Stephen Mayne asked whether shareholders could appoint a nominal representative to the board in the event the takeover was defeated, so they could have a say in the "crucial hours" over negotiating debt waivers with Seven and help select an administrator.

"They (Seven) might respond differently to a couple of directors playing a harder game," Mr Mayne said.

He said it was a "rare example of a democratic expression" that shareholders would vote against a board recommendation when it meant they would get nothing for their holding, or be "jumping from a clifftop".

Under questioning from disgruntled shareholders, the board said it did not know exactly what Seven's share of substantial notes over Nexus was.

When Mr Della Martina was asked what his post-Nexus plans would be and whether he would join former Woodside Petroleum colleague Mr Voelte at Seven, he said it he hadn't discussed it.

Three shareholders, with 6 million Nexus shares between them, told Fairfax Media ahead of the meeting that they felt they had been "shafted by Don (Voelte)".

"No man can serve two masters," one said of the perceived conflict of interest by Mr Voelte, who stepped down as Nexus chairman six weeks before Seven's takeover bid.

Speaking on condition of anonymity, one shareholder, with a holding of 2.5 million shares. said it was "another example of multi-millionaires trying to buy assets at a discount".

The collapse of the deal is an early setback for Seven Group's ambitions to build an energy business, although as the main creditor to Nexus it is still in a strong position to secure the junior's assets, which include a stake in Royal Dutch Shell's Crux gas field in the Browse Basin.

John Hartwell, a non-executive director of Nexus who will chair the meeting on Thursday, told Fairfax Media on Wednesday he could understand shareholders' disappointment with the Seven offer, but noted it was the "best option" before the board.

If Nexus is placed in voluntary administration, it would depend on how the administration process is managed as to whether Seven could still secure Nexus's assets given that Shell and another partner in Crux, Japan's Osaka Gas, hold pre-emptive rights over Nexus's stake in the field, according to sources.

Nexus shares closed on Wednesday at 1.3¢.

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