Woodside's bid for LNG developer Tellurian unlikely to be rivaled, sources say
09/08/2024 12:00
*
Woodside was sole bidder, no investors for Driftwood
project
*
Australian energy firm provided bridge loan with offer
By Curtis Williams
HOUSTON, Aug 9 (Reuters) -
Woodside Energy WDS.AX which
agreed last month
to buy Tellurian TELL.A , the developer of a
fully-permitted U.S. liquefied natural gas (LNG) project, for
$1.2 billion including debt is unlikely to face a rival bid,
people close the deal said.
While taking over the troubled Driftwood project would
help
Woodside's ambition
to become one of the world's largest independent LNG
producers, the Australian company had no competition, the people
said, despite Tellurian's eight-year-long effort to recruit
investors to the project that it had claimed to have invested
$1.5 billion.
Woodside's offer came with a bridging loan of up to $230
million that allows construction of the 27.6 million metric ton
per annum facility in Louisiana to proceed.
A Tellurian spokesperson said the LNG developer has not yet
scheduled a shareholder vote on the Woodside deal, which is not
expected to close until late this year. Its board has endorsed
the deal, agreed to not solicit other offers, and to pay a $36
million termination fee in the event a higher bid upends the
current offer.
The transaction includes the $900 million cash purchase
of outstanding Tellurian common stock at $1 per share, which
Woodside said represented more than a 75% premium to Tellurian's
last closing price before the deal.
Tellurian's second largest shareholder, Chatterjee
Management Company, which owns 5.3% of Tellurian, is not happy
with the sale price, but expects to support the Woodside deal
barring a better offer.
"If there is a better offer for the company, they can and
will show up, before the deal is presented to the shareholders,"
said Chairman Purnendu Chatterjee.
Chaterjee Management bought most of its shares in Tellurian
between Dec. 13 and Dec. 22 when the stock traded between 65 and
84 cents per share.
Hedge fund Magnetar Capital Partners this week disclosed it
had bought 46.1 million shares of Tellurian in Julyat weighted
average prices between 91 cents and 94 cents apiece.
The company, which holds a 5.16% stake in Tellurian, did not
comment on the purchases. But in a securities filing, it
described the stock purchases in the days after Woodside's bid
as designed to profit from the spread between the share price
and Woodside's $1 share offer.
Tellurian shares last traded at under 91 cents on Thursday.
Former Tellurian Chairman Charif Souki this year had floated
putting together an offer for the company after his departure at
the end of 2023. None has materialized and he did not reply to
requests for comment through his attorney or the company.
Prior to Woodside's offer, there was no serious interest
expressed in an equity investment in the Driftwood project or
Tellurian, two people familiar with the process told Reuters.
"We could not get anyone to commit to take volumes out of
Driftwood. The closest we got was the Heads of Agreement( HOA)
with Aethon Energy, one of the people told Reuters. Aethon is a
natural gas producer that acquired Tellurian drilling assets.
"If they could have gotten a few commercial arrangements it
would have convinced people the project could be built," the
person said.
Tellurian had reduced its liquefaction fees to closer to the
market's average $2.25 per million British thermal unit
processing fee, but potential customers wanted even lower fees,
the source said.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Australia's Woodside Energy to buy US LNG developer Tellurian
for $1.2 billion https://www.reuters.com/markets/deals/australias-woodside-energy-buy-us-based-tellurian-12-bln-2024-07-21/
Aethon Energy to buy Tellurian upstream assets for $260 million
https://www.reuters.com/business/energy/aethon-energy-buy-tellurian-upstream-assets-260-million-2024-05-29/
Williams Companies ruled out bid for Tellurian, executive says
https://www.reuters.com/business/energy/ceraweek-williams-companies-ruled-out-bid-tellurian-executive-says-2024-03-19/
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Reporting by Curtis Williams in Houston
Editing by Marguerita Choy)
((Curtis.Williams@thomsonreuters.com; +1 346 324 7560;))