NEXUS Energy shares have slumped more than 35 per cent as investors worry their shareholdings could be worthless within 48 hours.
Shareholders are expected to reject Seven Group's $26.6 million takeover offer for the struggling oil and gas company at a meeting on Thursday.
Billionaire Kerry Stokes' industrial services and media group offered two cents a share for the debt laden Nexus in late March.
But on Friday Nexus revealed more than 25 per cent of the company's shareholders had voted against the offer, meaning the deal is set to fall over.
Seven Group has told investors that if the deal is voted down it will not extend bridging finance for Nexus' continuing operations.
Debt owing under the bridging finance would then become payable and the Nexus board would need to place the company into voluntary administration.
Seven says it would then try to acquire all of Nexus' shares for "nil" through the administration process.
Nexus shares on Tuesday finished 0.6 cents, or 35.29 per cent, lower at 1.1 cents - a new low for the company.
The Australian Shareholders Association (ASA) is yet to form a position on the unusual situation, but spokesman Stephen Mayne said Nexus shareholders had received a tiny takeover valuation with a serious prospect of insolvency looming.
"Clearly there are a significant number of shareholders who feel they've been dudded," Mr Mayne said.
"It's an invidious situation."
Still, it was unclear whether some proxy holders would change their votes at Thursday's meeting given the prospect of receiving nothing for their shareholdings.
Some people were prepared to gamble that Seven Group would not wipe out equity holders in an administration process, he said.
Majority shareholder Andrew Greig, who holds 10.6 per cent of Nexus, is understood to have voted against the deal.
It comes after an independent expert's report found the two cent offer to be "fair and reasonable".
Nexus has not received competing or superior proposals and it has recommended that shareholders vote in favour of the deal.
Nexus has offshore exploration and production assets in the Gippsland Basin, off the south-east coast of Victoria, and the Browse Basin off the north-west coast of Western Australia.
In December 2007 Nexus shares were trading at $1.62, but it has since suffered revenue falls as it struggled to unlock the value of its assets.
The shareholders meeting will be held in Melbourne on Thursday.
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