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UPDATE 1-Australia's Santos rejects $5.1 bln sovereign wealth-backed bid

Published 22/10/2015, 10:31 am
UPDATE 1-Australia's Santos rejects $5.1 bln sovereign wealth-backed bid
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* Offer at 26 pct premium to last trade

* Santos still considering other alternatives

* Scepter backed by Brunei, UAE royal families (Adds Santos comments, Scepter detail)

MELBOURNE, Oct 22 (Reuters) - Embattled Australian oil and gas producer Santos Ltd STO.AX said on Thursday it has rejected a A$7.1 billion ($5.1 billion) takeover proposal from a fund backed by the ruling families of Brunei and the United Arab Emirates.

Santos effectively put itself on the block in August, looking to sell assets in a race to cut its A$8.8 billion net debt as its Gladstone liquefied natural gas (LNG) project begins operations amid a sharp slump in oil prices.

It said the bid from Bermuda-headquartered Scepter, pitched at a 26 percent premium to its last trade, was too cheap and included conditions that would hurt Santos' consideration of other alternatives in its asset sale process and a wider strategic review.

"The Proposal is considered to be opportunistic in nature and does not reflect the fair underlying asset value of the company," Santos said in a statement to the Australian stock exchange.

Santos shares jumped as much as 20 percent on news of the bid, but are still worth only half as much as a year ago.

Scepter, with offices in New York, London and Beijing, describes itself as a syndicate of ruling families, sovereign wealth funds and ultra-high net worth industrialists who have committed more than $14 billion to back large transactions.

Prince Abdul Ali Yil Kabier, a member of Brunei's ruling royal family, is a founder and director of the firm alongside financiar Rayo Withanage. Other directors include Brunei's Prince Bahar Bin Jefri Bolkiah, the United Arab Emirates' Sheikh Juma al Maktoum, former HSBC chairman John Bond and former U.S. ambassador to Qatar Patrick Theros.

Incorporated this year, the management team is made up of several former directors of Blackstone (N:BX) Advisory Partners in Asia.

Santos' spokesman declined to comment on what other alternatives the company was considering. Santos received the Scepter bid on Oct. 20,

The oil and gas producer has stakes in oil and gas production in Australia, Papua New Guinea, Indonesia and Vietnam, with the jewel in its crown considered to be its 13.5 percent stake in the Papua New Guinea LNG project.

Analysts have said that stake alone could be worth more than A$5 billion, based on the value implied in a recent takeover bid by Woodside Petroleum WPL.AX for Oil Search Ltd OSH.AX , a bigger stakeholder in PNG LNG.

($1 = 1.3866 Australian dollars)

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