Sunday 21 January 2018

Q & A: Crisis at explorer

Petroceltic operation in Algeria
Petroceltic operation in Algeria

What does Petroceltic's share suspension mean?

We've known for a while that the oil company was in financial difficulty. Since just before Christmas management have had to get a series of special waivers from the company's lenders in order to keep trading. Yesterday things moved up, or down, a gear when trading in the shares was suspended on the stock markets.

The shares still exist, shareholders still own the company and the move does not formally affect the price of Petroceltic shares. But for now the stock is not being traded and its an indication of how bad the situation has become.

What can shareholders do?

Not much. The suspension means shares can't be bought or sold on the public markets. Until that is relaxed, small shareholders are caught between the big players in the Petroceltic drama. The board and management are still in charge, but they are at loggerheads with Worldview, the biggest shareholder on the one hand and under pressure from lenders at the same time. Now the courts are involved, since Worldview sought examinership for petroceltic last week.

Where is all this heading?

Petroceltic has good assets, even after the decline in oil prices over the past year. That's why there is a battle for the company. Management, who know the business best, seem to be intent on hanging on to the best Algerian assets, pictured inset, even if it means selling out of Egypt to finance them.

Worldview is already the biggest shareholder and has made no secret of its desire to gain control of Petroceltic, despite the well aired beef with management. In theory the banks, who have security over all of the company assets and whose lending terms have been breached now have the whip hand. However, the bid for examinership does change that.

If the court accepts the petition - it is by no means certain it will - any interested party that proves it has the finance and secures backing from any class of creditors will be able to table a rescue package.

Small shareholders will hope there is enough value around that something can be redeemed, but the days when Petroceltic could walk away from a £500m (650m) takeover offer are long gone.

Irish Independent

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