Petroceltic investors in limbo over buyout effort by Worldview
Published 04/03/2016 | 02:30
Shareholders in embattled Irish exploration firm Petroceltic have been told by the board that it can't advise them to either sell or retain their shares in light of an offer for the company, because of its precarious financial position and uncertainty about whether the offer could be completed.
Last week, Petroceltic's single biggest shareholder, Switzerland-based activist investor Worldview, said it intended to make an offer for Petroceltic that would value the Irish firm at €8m.
Petroceltic and Worldview have been at loggerheads for well over a year about the exploration firm's fate.
Worldview, which is headed by Angelo Moskov, claimed last week that the equity value of Petroceltic is now zero.
Petroceltic, whose chief executive is Brian O'Cathain, has just under $218m (€199m) in debt under a senior bank facility, and has a rolling waiver on repayments until tomorrow. It has been engaged in talks with lenders, and management have been exploring a potential sale of the business since December.
That strategic review is continuing, with Petroceltic management having indicated that its lenders are prepared to grant further waivers as long as progress is being made.
The board of Petroceltic, which has a significant gas asset in Algeria, has urged shareholders in the company not to take any action yet in light of the Worldview intention to make an offer.
But it has conceded that it may not be able to come to an agreement with lenders, which could result in shareholders being left with no realisable value from their holdings.
However, the board also claimed that Worldview, which owns close to 30pc of the Irish firm, has not put forward any funding proposals for Petroceltic during the offer period, in order to allow completion of the offer.
"The offer also provides no information on the proposed treatment of the company's senior bank facility both during the offer period and upon any change of control of the company, which, unless waived by the lenders or otherwise amended, would trigger an immediate repayment obligation in respect of all amounts owing under the senior bank facility," claimed Petroceltic.
The board said that it also has total cash balances of $33.4m.
The directors added: "The board believes that the offer undervalues the company on the assumption of its having appropriate long term funding in place."
Petroceltic said that it is not possible to give a "firm recommendation" to all Petroceltic shareholders at this time to either accept or reject the offer once it's made.