Wednesday 7 December 2016

Takeover rules behind €6m bid for worthless Petroceltic

Published 09/04/2016 | 02:30

Petroceltic operation in Algeria
Petroceltic operation in Algeria

A Swiss investment firm has had to press ahead with a €6m bid to buy effectively worthless Petroceltic shares, because of its own role in tipping the company into Examinership, the Irish Independent has learned.

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If the offer is accepted next week Worldview will end up cutting a cheque without increasing its control of Petroceltic.

That's because the company is insolvent, a condition of Examinership. In insolvency the value of assets passes to creditors, particularly secured creditors. After buying its debt from banks Worldview is Petroceltic's biggest secured creditor.

Worldview Capital's Sunny Hill unit originally made its offer to buy Petroceltic on February 26, when the business was still trading normally.

At that time the 3 pence per share price represented a significant discount to the price on the markets.

However, on March 9 Michael McAteer of Grant Thornton was appointed as interim Examiner at Petroceltic after a process instigated by Worldview.

The courts made the appointment after accepting Worldview's case that Petroceltic required protection from its creditors in order to rescue the business.

At that stage the shares had been suspended and the depth of the crisis at the company was clear.

However, in a surprise move Sunnyhill ploughed ahead with its takeover bid, apparently regardless of the change in circumstances. It posted an offer document to shareholders on March 24, setting a deadline of 1pm on April 14 to accept the unchanged 3 pence a share bid.

The Irish Independent understands that the Sunnyhill bid proceeded under advice from the Takeover Panel, which oversees the merger and acquisition of listed companies.

It's understood to have ruled that a condition of the original offer, that the offer would only stand as long as Petroceltic was solvent, could not be invoked in this case.

Sources say that was because Worldview itself had made the original move to seek Examinshership. The other condition of the bid is that 90pc of shareholders must accept it. That's a high hurdle. Worldview could lower it if it wanted to be sure of the takeover succeeding, but has opted not to. A spokesman for the Panel could not be reached last night.

Unsurprisingly, Petroceltic's board has recommended that shareholders accept the bid, as the best, indeed only, hope of recovering any value from the shares.

Yesterday, the High Court confirmed the Examinership for Petroceltic and two related companies.

There was no opposition to the application brought by Worldview and supported by the company. Paul Gallagher SC, for Worldview, said it had in affidavits addressed concerns raised by the company.

These included claims of a want of good faith in bringing the petition when Worldview's Sunny Hill unit had made an offer for Petroceltic. That offer, along with any other offers, would be considered by the Examiner, he said.

The court extended protection to May 12 to allow time to pursue an investment agreement and survival proposals.

Irish Independent

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