Assam Company wants to buy Canoro

Vol 13, PW 22 (22 Apr 10) People & Policy
     

India’s Assam Company, owned by the Jajodia family, wants to buy Toronto-listed Canoro Resources but may discover that Hong Kong-headquartered Mass Financial Corp has usurped its plans.

Canoro (60% and operator) partners Assam Company (40%) at the 52.75-sq km producing Amguri oil and gasfield in Assam. They are also partners at exploration block AA-ON/7 in Nagaland.

PETROWATCH learns a six-member Assam Company team left for Toronto on the evening of April 20 with an offer to buy Canoro, after a decision made that afternoon. “Assam and Canoro have been in talks since mid-December last year,” says an industry source.

“Assam Company has carried out due-diligence on Canoro and its representatives have visited Toronto twice since talks began.” Assam Company senior management, he adds, believes Canoro is a good buy and will offer 21 Canadian cents (US$0.20) for each Canoro share.

“Canoro shares are trading at 14 Canadian cents each ($0.139),” we hear. “Assam Company thinks 21 Canadian cents is a ‘sweet’ offer.

” Assam Company’s six-member delegation will submit an offer to Canoro’s main shareholders to buy their stakes, but is likely to be disappointed. Just a day before the delegation flew to Toronto, on April 19, Canoro announced it had sold 24.798m shares totalling 18% of its stock to Chinese company Mass Financial Corp at 13 Canadian cents ($0.129) a share to raise $3.18m.

“What Canoro did was unprofessional,” complains a disgruntled Assam Company sympathiser. “How could they sell shares to someone else when they were talking to Assam Company Will the Indian government allow a Chinese company to invest in the oil sector” Canoro will appoint two Mass Financial nominees on its board of directors in line with the agreement.

Separately, Canoro also announced on April 19 that it is planning a ‘rights offering’ under which existing shareholders will receive one right for each share held entitling them to buy another share for just 10 Canadian cents ($0.09). Canoro also announced that Mass Financial has agreed to take any un-subscribed shares from the rights offering.

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