Monday 22 December 2014

Oil and gas explorer PetroNeft rejects $19m debt deal with its largest shareholder

Published 27/03/2014 | 02:30

An engineer works on a PetroNeft pipeline in Siberia.
An engineer works on the Siberia- focused, oil- production company PetroNeft pipeline

OIL and gas explorer PetroNeft is understood to have rejected a deal that would have seen its biggest shareholder agree to take on a significant amount of the firm's debt.

The offer by Natlata Partners expired at 3pm yesterday, without a response from the board of London and Irish stock exchange-listed PetroNeft.

Natlata Partners is owned by Russian investor and politician Maxim Korobov, a political ally of the country's president, Vladimir Putin.

Its 16pc stake makes Natlata the biggest single shareholder in PetroNeft.

Last week, Mr Korobov offered to repay a loan of around $18.8m (€13.6bn) owed by PetroNeft to Australian lender Macquarie. In exchange, Natlata wants an increased stake in the oil explorer, but to acquire the shares without triggering a mandatory takeover offer for the entire company. The deal would mean the transfer from PetroNeft to Natlata of the outstanding balance on an $18.8m loan owned to Macquarie in exchange for ordinary shares at 5.5 pence per share.

Under the deal, all shareholders would also have a right to participate in a $10m issue of additional fresh shares at the same price. Shares in PetroNeft were trading at 5.65 pence in London yesterday.

Maxim Korobov said that the deal will cut PetroNeft's debt and provide capital for investment.

DEVELOPMENT

It would negate the need for a "farm-out" deal the board is seeking to agree with an outside investor for its "License 61" prospect in Russia, he said.

The Russian investor has also demanded an emergency general meeting of PetroNeft shareholders, where Mr Korobov wants to table a motion to remove five directors – Dennis Francis, David Sanders, Paul Dowling, David Golder and Vakha Sobraliev – from the board and replace them with new nominees.

It comes after PetroNeft said last week that it had raised $6.7m (€4.8m) to fund the development of its Russian oilfield, and was working to nail down a farm-out deal before April.

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