History
Esenjay, a Texas Gulf Coast gas explorer, struggled to raise capital at acceptable cost and was bought for US$2.84 a share in cash by Santos in 2002.
1999-2001: A quiet record
Esenjay Exploration was a Texas-based explorer focused on natural gas along the Gulf Coast. The record for these years is thin. In October 1999 the company deregistered its securities, which ended its obligation to file reports with the US securities regulator. The beats show little else until the end of 2001, and they do not set out how the company funded its drilling or how many shares it had on issue over these years. Its later filings say it began a review of its strategic alternatives in late 2000.
2002: The Santos takeover
That review ended on 17 March 2002, when Esenjay agreed to be bought by Santos Americas and Europe Corporation, a subsidiary of Australia's Santos Ltd. The price was US$2.84 per share in cash, paid through a tender offer (a direct offer to shareholders) followed by a merger at the same price. Santos put the premium at only 4.4% to the 15 March closing price. It valued the deal at about US$80 million, including roughly US$24.2 million of net debt and working capital, and said it would fund it from existing cash.
The board recommended acceptance. It cited its long-running difficulty in accessing enough capital at acceptable cost, and Hibernia Southcoast Capital considered the price fair. Two major shareholders and the Chairman, holding about 52% of the shares (9,991,662 shares), had already agreed to tender. Santos described what it was buying: 32 exploration prospects, over 40,000 net acres, and year-end 2001 proved and probable reserves of 47.3 billion cubic feet of gas and 1.0 million barrels of oil.
The formal offer opened on 26 March through ECM Acquisition Company. Esenjay disclosed that officers and directors held 463,425 shares, worth $1,316,127 at the offer price, that employees would receive severance and incentive payments on a change of control, and that Randall & Dewey, whose principal Jack Randall is a director, would receive about $860,000 in fees on closing.
The offer expired on 22 April with about 17.8 million shares, or 92.3% of those outstanding, tendered. Santos accepted them all for payment. At 24 April, a short-form merger was expected on or about 26 April, converting the remaining shares into $2.84 in cash, except for holders who properly exercised dissenters' rights under Delaware law. Esenjay would then become a wholly owned Santos subsidiary and stop being publicly traded. On 26 April it terminated the registration of a class of its securities, and on 7 May its securities were notified for removal from listing.
Written from the 9 story beats below (1999 to 7 May 2002), which come from the company's own announcements and filings.