Tap bid for Arc doomed before takeoff

It has emerged that Tap Oil turned down the offer to take up a potential 10% stake in Arc Energy late in 2001, a stake which ended up going to Hardman Resources and defeating Tap's subsequent takeover bid for Arc in March this year.

Arc Energy approached a number of companies in 2001 to take a position on their share register, and Hardman, which has synergies with Arc through its interests in the Perth Basin, took up the offer.

The deal Hardman took entailed a convertible note for $2.5 million, exercisable at 16 cents. Arc was trading around 8c at the time and Hardman ended up selling half their stake above 40c, booking a $2.3 million profit on the deal.

Brokers familiar with Tap say the decision was a typical conservative one by the company, which has steadily built itself into a $300 million company by pursuing risk averse strategies.

Arc management would not confirm the report, as it is known they are keen to see relations normalise between the two West Perth explorers after the unsolicited bid turned bitter. Tap Oil's managing director Paul Underwood had not responded to enquiries by press time.

Tap's bid stipulated 80% or more acceptances were needed for the bid to succeed. With 10% being locked up by Arc directors and management and a further 10% being held by Hardman, industry observers say the bid to achieve over 80% was doomed before it saw the light of day.

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