Nov. 21 (Bloomberg) -- Petroliam Nasional Bhd., which is seeking approval of a $5.2 billion takeover of Progress Energy Resources Corp., has proposed a public offering of shares in the natural gas producer within five years as a concession to Canada’s government, a person with knowledge of the matter said.
Malaysia’s state oil and gas company, known as Petronas, offered to sell Progress Energy shares three to five years after completing the buyout, the person said, asking not to be identified as the information is private. The move may also address shareholders concerns over Progress Energy’s future, the person said.
Making Progress Energy shares available to Canadian investors would also give the country regulatory oversight over the company. Christian Paradis, Canada’s industry minister, rejected the acquisition last month under the nation’s foreign-takeover law on grounds that it wasn’t deemed to be to the country’s “net benefit.”
Buying Progress Energy would give the Malaysian company ownership of the largest holder in the Montney shale-gas area of British Columbia and full control of the three Progress Energy fields Petronas bought a stake in last year.
The rejection 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.’s $15.1-billion takeover of Calgary-based oil company Nexen Inc. will be approved under its foreign takeover law.
Cnooc, China’s biggest offshore oil and gas producer, has accepted management and employment conditions set by the Canadian government as it seeks approval for its Nexen takeover, two people familiar with the matter said yesterday. Commercial issues are still being negotiated such as the extent of capital spending plans and other matters related to Cnooc’s status as a state-owned enterprise, said one of the people on condition they not be identified because negotiations are confidential.
Petronas, which agreed to buy Progress Energy for C$5.2 billion ($5.2 billion) in June, was allowed to appeal its rejection and has since been making representations to the government. The two companies further extended a deadline for the acquisition to Dec. 30 while submitting further undertakings to the industry minister, according to a joint statement yesterday.
Petronas wants to convince Canadian authorities of its operational independence from the Malaysian government, the Financial Times reported Nov. 12, citing Chief Executive Officer Shamsul Azhar Abbas. It has offered to appoint independent directors to Progress Energy’s board, according to the report.
Azman Ibrahim, Petronas’ spokesman, declined to comment on the relisting proposal by e-mail today.
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.’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 editor responsible for this story: Jason Rogers at email@example.com