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Northern Energy rejects New Hope bid

Coal miner New Hope Corporation Ltd has launched a $193 million cash takeover offer for coal explorer Northern Energy Corporation Ltd, which has rebuffed the bid as inadequate but says it is willing to keep talking.

New Hope is offering $1.50 per share, which represents a 42.9 per cent premium to Northern Energy's closing price on Wednesday of $1.05.

The target's shares were placed in a trading halt on Friday and last traded at $1.115.

New Hope said the offer was highly compelling, but Northern Energy said in a statement prior to the formal bid being launched that the non-binding, indicative offer it had received was inadequate.

"After careful consideration of the proposal and its conditions, and, after taking financial and legal advice, the board considers the proposal to be inadequate and has informed New Hope of this view," Northern Energy said in a statement on Friday.

"The board has also informed New Hope that it is open to continuing discussions and will consider any proposal that is in the best interests of shareholders."

Northern Energy also recommended shareholders take no action at this stage.

New Hope said it could fund Northern Energy's projects from cash reserves.

"Northern Energy is a coal exploration company and requires significant amounts of additional capital to develop its project pipeline," New Hope chairman Robert Millner said.

"We believe this to be a very attractive offer for NEC (Northern Energy) shareholders as it is at a substantial premium to NEC's recent trading history.

"Our offer also provides certainty of value in what has been a volatile period for NEC shareholders."

Northern Energy said it was one of the few junior Australian coal companies with a substantial inventory and planned coal production.

"It comes as no surprise that we have received this approach," Northern Energy chairman Chris Rawlings said.

New Hope shares had inched one cent higher to $5.09 by 1305 AEDT.