EPR 0.00% 0.7¢ essential petroleum resources limited

bpt agreement

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    SARAH MARTIN

    December 16, 2009 12:30pm

    ..BEACH Energy will take a controlling stake in Victorian company Essential Petroleum Resources in exchange for a $12 million debt.

    The agreement was signed by the two companies this week and represents a return of about 10 cents in the dollar to Beach, but saves EPR from liquidation.

    Beach, EPR and Japanese company Mitsui were involved in an off-shore oil drilling joint venture earlier this year, for which EPR was unable to raise its share of capital costs.

    EPR's $12 million debt to Beach will be discharged in return for a 51 per cent stake in the Melbourne-based company and a 50 per cent stake in an on-shore petroleum permit in the Otway Basin.

    EPR also owes about $6 million to Mitsui, who will accept a payment of $698,000 once the company recommences trading and successfully completes a capital raising.

    The deal is still subject to EPR shareholder agreement and will be voted on in February 2010.
    Beach managing director Reg Nelson said the deal offered EPR a ``new life''.

    "The choices were to liquidate the company, which wouldn't have really delivered much benefit to Beach or the other creditors, or to look at a compromise,'' he said.

    Under the agreement, the existing directors of the Board will resign and Beach will appoint nominee directors.

    "We will look to recapitalise and reinvigorate Essential with the view that we can add value for Beach and the other shareholders,'' Mr Nelson said.

    Essential's assets comprise both on-shore and off-shore exploration permits in the Otway basin, predominantly in Victoria.

    "They probably don't have at this stage any intrinsic value but we believe we will be able to look for other opportunities and put value into the company and give it a new life.''

    Chairman of EPR John Cornelius said the agreement would allow the company to recommence trading, following four months in a trading halt, and make a new start.

    "This may not otherwise have been achievable,'' he said.
 
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