Bloomberg News

Petronas Said to Answer Queries on Revised Progress Offer

November 16, 2012

Petroliam Nasional Bhd. has responded to queries from the Canadian government after submitting a modified bid for Progress Energy Resources Corp. (PRQ), a person with knowledge of the matter said.

Malaysia’s state energy company made a revised proposal after the government blocked its C$5.2 billion ($5.2 billion) takeover of the Calgary-based natural gas producer last month on grounds that it wasn’t a “net benefit” to the country. Canada wanted clarifications on the new offer said the person, who declined to be named as the information is confidential.

Progress rose 2.3 percent to C$20.43 in Toronto today, about 7.1 percent below the C$22 a share offer price.

Petronas, as the company is known, agreed to buy Progress Energy in June. The acquisition would give Malaysia’s state- owned oil and gas producer ownership of the largest holder in the Montney shale-gas area of British Columbia and full control of the three Progress Energy fields it bought a stake in last year. Asian buyers have been lured to North America by cheaper gas prices.

A spokesman for Progress Energy declined to comment on details of the offer made by Petronas to the Canadian government.

“Petronas, as per the last news release, was going to be making additional submissions, after having met with Industry Canada officials. But that’s all I can confirm right now,” Greg Kist, vice president of marketing for Progress Energy, said in a phone interview from Calgary today.

Period Expires

Petronas spokesman Azman Ibrahim declined to comment on the talks in an e-mail to Bloomberg News.

The Malaysian company has since offered to appoint more independent directors to Progress Energy’s board, the Financial Times reported Nov. 12, citing the Malaysian firm’s Chief Executive Officer Shamsul Azhar Abbas. Petronas has also stressed its operational independence from Malaysia’s government, telling the newspaper it behaves like publicly traded company.

Petronas was given 30 days from Oct. 20 to appeal and make additional concessions. Christian Paradis, Canada’s industry minister, said yesterday that his ruling may come after that period expires this weekend.

The rejection of Petronas’ bid has raised questions about the openness of Canadian Prime Minister Stephen Harper’s government to foreign investment. It’s also cast doubt on whether Beijing-based Cnooc Ltd. (883)’s $15.1-billion takeover of Nexen Inc. (NXY) will be approved under its foreign takeover law.

The Petronas decision was the second time in two years Harper’s administration has denied a multi-billion dollar overseas bid. The government blocked BHP Billiton Ltd. (BHP)’s $40 billion hostile offer for Potash Corp. of Saskatchewan Inc. in 2010 after the province’s premier, Brad Wall, opposed it.

To contact the reporter on this story: Manirajan Ramasamy in Kuala Lumpur at rmanirajan@bloomberg.net

To contact the editor responsible for this story: Andrew Hobbs at ahobbs4@bloomberg.net


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