Arrow Energy NL has announced an agreement for the staged investment in and acquisition by Arrow’s subsidiary, Arrow Energy International Pty Ltd (“Arrow International”), of Global CBM Pty Ltd (“Global”).
Global is in the advanced stages of business development for the acquisition of coal bed methane (“CBM”) assets in Indonesia, China, Vietnam and India. Under the agreement between the two companies, Arrow and Global’s international business development teams and opportunities will be merged into Global which will be renamed Arrow Global CBM Pty Ltd. Up to $2 million of business development costs for Arrow Global CBM will be funded by Arrow International. In return, Arrow International will receive an initial 50% shareholding interest in Global, will nominate two directors to the four person board and have a 2 year option to acquire the remaining 50% shareholding from the existing Global shareholders.
As previously announced, in order to provide for an appropriate funding basis for Arrow’s international projects and to maximise Arrow shareholder value, it is the intention of Arrow to eventually seek an overseas listing of its foreign assets, which already include three CBM projects in India, through the listing of Arrow International. Prior to this listing taking place Arrow International will have the option to acquire a further 25% in Global from its existing shareholders for US$4m worth of Arrow International shares. Arrow will also have a second option, to acquire the final 25% in Global by paying 25% of an independent expert’s valuation of Arrow Global CBM. That valuation will exclude the Indian CBM blocks to which Arrow already has title. Both of these latter two payments will be made by the issue of shares in Arrow International at the IPO share pricing.
Arrow is very pleased to have acquired these advanced business development opportunities and considers this the next step in a low cost compilation of a significant portfolio of international CBM assets. Arrow is confident that it can replicate its success as one of the pioneers of the Australian CBM industry in a number of countries where the CBM industry is still in its infancy and where demand for cleaner energy sources is experiencing strong growth.
