Petronas, Progress extend closing date on proposed deal

Mon Oct 29, 2012 12:57pm EDT
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By Niluksi Koswanage

KUALA LUMPUR (Reuters) - Malaysian state oil company Petronas said on Monday it has extended the closing date on its bid for Canadian gas producer Progress Energy Resources until November 30, as it works to overturn the Canadian government's rejection of the proposed deal.

Canada blocked Petronas' C$5.17 billion ($5.18 billion) bid for Progress this month after Industry Minister Christian Paradis said it was unlikely to bring a "net benefit" to the country. The government gave Petronas 30 days to make additional representations to alter the ruling.

Petronas said it intends to make further submissions to the ministry in order to obtain approval of the proposed deal. The company said it had met with Canadian officials to understand the basis for the rejection.

The transaction was earlier expected to close by October 31. Under the terms of the deal, Petronas has the right to extend the outside date from October 31 for up to 90 additional days, in 30-day increments, if the required regulatory approvals have not been obtained.

Two Petronas sources familiar with the deal told Reuters earlier on Monday that the company had agreed to an extension with Progress and was eager to complete the acquisition despite the unexpected decision by Canada.

The Petronas board agreed to the extension at a regular monthly meeting, the sources told Reuters. The Malaysian company is also studying additional steps to reassure Canada that the proposed acquisition will meet the "net benefit" requirement, the sources said.

"Petronas will go all the way to secure this deal. It is important to Petronas that the deal is done," one of the sources said.

The Canadian government, sources have told Reuters, wanted to approve the deal but was afraid doing so would tie its hands when reviewing a much more controversial $15.1 billion bid by China's CNOOC Ltd for Nexen Inc.   Continued...

Petronas advertising boards are seen near the grandstand ahead of the Malaysian F1 Grand Prix at the Sepang circuit outside Kuala Lumpur April 7, 2011. REUTERS/Tim Chong