Letter to Shareholders - Update on Landbridge approach & GSA
Perth, April 16, 2014 AEST (ABN Newswire) - Attached is a copy of a letter being sent to WestSide Corporation Limited (
ASX:WCL) (WBRIF:OTCMKTS) shareholders in connection with the approach by Chinese company Landbridge Group Co., Ltd announced on 10 March 2014 and WestSide's subsequent execution of a gas sales agreement with GLNG announced on 27 March 2014.
A printed copy of this letter is being mailed to all shareholders today.
Dear Shareholder
I am writing to provide you with an update on the conditional notice of intention to make a conditional off-market takeover bid ("Conditional Proposal") which was received from Chinese company Landbridge Group Co., Ltd ("Landbridge") on 10 March 2014.
The Board determined that the Conditional Proposal's price of $0.36 per share was manifestly inadequate and that the conditionality meant that there was significant risk as to whether an actual offer capable of acceptance would ever be received. Consequently, the Board decided to proceed with the gas sales agreement ("GSA") with GLNG, which is a substantially superior alternative for the Company and its shareholders. This is also in line with the Company's previously stated strategy of delivering significant value from the Meridian field under a highly attractive gas sales agreement.
The GSA allows for sales of up to 65 Terajoules a day (TJ/d) or 33TJ/d of gas net to WestSide, but even at a more conservative production rate of only 40TJ/d (gross) it could generate more than $60 million1 of revenue net to WestSide each year from 2016. It is our firm belief that the value of the GSA by itself significantly exceeds the value of the Conditional Proposal. In fact, simply continuing at current production rates with minimal additional investment would generate substantial free cashflow over the next 20 years from only producing Proved (1P) reserves. In addition, there is significant upside beyond the GSA, since at maximum, it would consume only about two thirds of our current Proven and Probable (2P) gas reserves and about one third of our Proven, Probable and Possible (3P) reserves.
Our immediate plan, which is well underway, is to increase production volumes next year for delivery into the new GSA. Key contracts have been signed for the upcoming drilling programme and we will be commencing drilling shortly.
We will also continue to work in parallel to add value to our non-contracted reserves, and indeed continue to explore for more reserves. As previously stated, our 2014 programme is fully funded from existing cash balances and the rate of future field expansion and therefore funding requirements is under WestSide's control. We are actively exploring a number of options including corporate debt, project finance and lease financing. Importantly, the Board will only pursue a funding strategy that delivers long term value to shareholders.
We have retained Highbury Partnership Pty Limited as financial adviser and Allens as legal adviser to help us review and respond to the Conditional Proposal.
I will write to you again if there is a material development with respect to the Conditional Proposal. In the interim I urge you to disregard any communication from Landbridge.
Yours faithfully,
Mr Robert Neale
Chairman
Contact
WestSide Corporation Ltd
Mike Hughes
Managing Director and CEO
TEL: +61-7-3020-0900
WestSide Corporation Ltd
Damian Galvin
Company Secretary
TEL: +61-7-3020-0900
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