Major shareholder Mitsui was instrumental in creating the MBO, which still has not gained the approval of Novus' independent directors.

"In recent discussions I have been encouraged by Mitsui, Novus' major shareholder, to formulate a management-led bid as an alternative. Mitsui invested in Novus principally to establish a Strategic Alliance through which both companies would benefit by sharing certain resources," said Novus chief, Bob Williams.

Since Medco announced its $1.74 per share ($326 million) offer on 22 December 2003, Novus and its advisers have sought alternative proposals to maximise shareholder value. The Crosby consortium made the company aware of its proposal on 17 January 2004.

The independent directors of Novus have stated they are pleased that an alternative proposal has been made to shareholders, but feel that the Crosby offer still does not take into account the underlying value of Novus.

The A$1.77 cash per share offer values Novus at A$331 million on a fully diluted basis, assuming the exercise of all outstanding options.

"As part of the overall management effort in response to the unsolicited Medco offer received just before Christmas, the Board requested that I should seek alternative offers for Novus in order to maximise value for all of Novus' shareholders," said Williams.

"Conversations with institutions and other shareholders since receipt of the Medco offer have indicated that they do not want to lose the opportunity to sell their Novus stock at a price well above its average for the last 12 months."

Novus has a global list of assets of which about 29% of their reserves are in Indonesia and 24% in Oman.