Woodside's $1.2 Billion Bid for Tellurian Likely Unchallenged, Sources Say

(Reuters) — Woodside Energy which agreed last month to buy Tellurian, the developer of a fully-permitted U.S. liquefied natural gas (LNG) project, for $1.2 billion including debt is unlikely to face a rival bid, people close the deal said.

While taking over the troubled Driftwood project would help Woodside's ambition to become one of the world's largest independent LNG producers, the Australian company had no competition, the people said, despite Tellurian's eight-year-long effort to recruit investors to the project that it had claimed to have invested $1.5 billion.

Woodside's offer came with a bridging loan of up to $230 million that allows construction of the 27.6 million metric ton per annum facility in Louisiana to proceed.

A Tellurian spokesperson said the LNG developer has not yet scheduled a shareholder vote on the Woodside deal, which is not expected to close until late this year. Its board has endorsed the deal, agreed to not solicit other offers, and to pay a $36 million termination fee in the event a higher bid upends the current offer.

The transaction includes the $900 million cash purchase of outstanding Tellurian common stock at $1 per share, which Woodside said represented more than a 75% premium to Tellurian's last closing price before the deal.

Tellurian's second largest shareholder, Chatterjee Management Company, which owns 5.3% of Tellurian, is not happy with the sale price, but expects to support the Woodside deal barring a better offer.

"If there is a better offer for the company, they can and will show up, before the deal is presented to the shareholders," said Chairman Purnendu Chatterjee.

Chaterjee Management bought most of its shares in Tellurian between Dec. 13 and Dec. 22 when the stock traded between 65 and 84 cents per share.

Hedge fund Magnetar Capital Partners this week disclosed it had bought 46.1 million shares of Tellurian in Julyat weighted average prices between 91 cents and 94 cents apiece.

The company, which holds a 5.16% stake in Tellurian, did not comment on the purchases. But in a securities filing, it described the stock purchases in the days after Woodside's bid as designed to profit from the spread between the share price and Woodside's $1 share offer.

Tellurian shares last traded at under 91 cents on Thursday.

Former Tellurian Chairman Charif Souki this year had floated putting together an offer for the company after his departure at the end of 2023. None has materialized and he did not reply to requests for comment through his attorney or the company.

Prior to Woodside's offer, there was no serious interest expressed in an equity investment in the Driftwood project or Tellurian, two people familiar with the process told Reuters.

"We could not get anyone to commit to take volumes out of Driftwood. The closest we got was the Heads of Agreement (HOA) with Aethon Energy, one of the people told Reuters. Aethon is a natural gas producer that acquired Tellurian drilling assets.

"If they could have gotten a few commercial arrangements it would have convinced people the project could be built," the person said.

Tellurian had reduced its liquefaction fees to closer to the market's average $2.25 per million British thermal unit processing fee, but potential customers wanted even lower fees, the source said.

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