Cove Energy takeover battle re-opens after tax clarification
COVE Energy is to restart the process of selling itself after the Mozambique government clarified how much tax will be due on the disposal of the business.
The Irish-led exploration firm has been at the centre of a takeover frenzy since earlier this year after it announced plans to sell itself to the highest bidder.
That process was put on hold, however, after the Mozambique authorities, where Cove has much of its drilling interests, said it would levy a tax on any sale of the company.
The government claimed the value of Cove was based in part on its assets in Mozambique, and so it was entitled to take a cut from any sale.
Now regulators there have told Cove they will impose capital-gains tax at a rate of 12.8pc on its assets in the country.
Cove has an 8.5pc stake in the Offshore Area 1 field in the Rovuma basin in Mozambique.
That field contains one of the largest natural-gas discoveries of recent years. Anadarko Petroleum, which operates the field, has previously estimated it could contain up to 30 trillion cubic feet of gas.
Coves executives, including Irishman John Craven, stand to make tens of millions of euro between them once the business is finally sold.
Royal Dutch Shell bid just over €1.2bn for Cove in February before Thailand's PTT bid close to €1.5bn, sparking expectations of an auction for the company and its assets. A number of other companies, including India's ONGC, are also believed to contemplating a bid for the business.
The sale process stalled however, when Mozambique minerals minister Esperanca Bias said his government would look to impose capital-gains tax on any sale, sparking fears that Cove could become embroiled in months of litigation before the business was finally taken over.
Those fears, however, appear to have been misplaced.