Further to an ongoing review by the board of directors of the Company (the "Board") of the various strategic options available to the Company and the trading update made by the Company on 10 January 2025, the Board has unanimously concluded that it would be appropriate to investigate the sale of the Company and therefore has now decided to commence a "Formal Sale Process" for the Company (as referred to in Note 2 on Rule 2.6 of the Takeover Code) (the "Formal Sale Process"). Prior to commencing the Formal Sale Process, the Company had recently initiated a Private Sale Process and contacted a limited number of potential counterparties privately to assess whether such parties could put forward a proposal that would deliver greater value to Enteq's shareholders than pursuing its current standalone strategy. For clarity, the Company is currently in discussions with two parties, but is not in receipt of an approach from, any potential offeror at the date of this announcement. The two parties will now participate in the Formal Sales Process.
The Company's current cash balances as at the date of this announcement total approximately US$0.95 million and the Company has no debt. The Company continues to progress a number of near-term opportunities including working towards commencement of active test drilling operations in Australia, and pursuing other potential customer opportunities for the SABER tool. The Company's cashflow model shows positive cash balances until the beginning of June 2025. The Board are focused on the timing to establish commercial revenues from operations and are fully aware of the ongoing challenging market conditions relating to the raising of equity financing.
The Board continues to believe in the quality of the SABER technology and the compelling market opportunity driven by wider market conditions and industry demand for a low cost to operate rotary steerable system. The Board remains positive that a solvent solution can be found.
Formal Sale Process
The Takeover Panel has agreed that any discussions with third parties in relation to an offer for the Company will take place within the context of a "Formal Sale Process" (as referred to in Note 2 on Rule 2.6 of the Takeover Code).
As part of the formal sale process, the Board invites expressions of interest from interested parties regarding a potential transaction for the entire issued and to be issued ordinary share capital of the Company. The formal sale process is being managed by Gneiss Energy Limited ("Gneiss"), who are also advising the Board in respect of their obligations under the Takeover Code.
The Company intends to conduct a very targeted and strategic process, focused on those parties that understand and value the full potential of the Company. Parties interested in participating in the formal sale process should contact Doug Rycroft at Gneiss through the contact details below to receive further information. Interested parties will be required to enter into a non-disclosure agreement and standstill arrangement with the Company on terms satisfactory to the Board and on the same terms, in all material respects, as other interested parties before being permitted to participate in the process. The Company then intends to provide such interested parties with certain information on its business, following which interested parties shall be invited to submit their proposals to Gneiss. The Company is commencing the formal sale process immediately. Further announcements regarding timings for the formal sale process will be made as appropriate.
The Takeover Panel has granted a dispensation from the requirements of Rules 2.4(a), 2.4(b) and 2.6(a) of the Takeover Code such that any interested party participating in the formal sale process will not be required to be publicly identified as a result of this announcement and will not be subject to the 28 day deadline referred to in Rule 2.6(a) of the Takeover Code for so long as it is participating in the formal sale process. Interested parties should note Rule 21.2 of the Takeover Code, which will prohibit any form of inducement fee or other offer-related arrangement, and that the Company, although it may do so in the future, has not at this stage requested any dispensation from this prohibition under Note 2 of Rule 21.2.
The Board reserves the right to alter any aspect of the process as outlined above or to terminate the process at any time and in such cases will make an announcement as appropriate. The Board also reserves the right to reject any approach or terminate discussions with any interested party at any time.
Shareholders are advised that this announcement does not represent a firm intention by any party to make an offer under Rule 2.7 of the Takeover Code and there can be no certainty that any offers will be made as a result of the formal sale process, that any sale will be concluded, nor as to the terms on which any offer may be made. Shareholders are advised to take no action at this time.
As a consequence of this announcement, an 'offer period' has now commenced in respect of the Company in accordance with the Takeover Code, and the attention of shareholders is drawn to the disclosure requirements of Rule 8 of the Takeover Code, which are summarised below in "Disclosure Requirements of the Takeover Code".