Friday 17 November 2017

UK hedge fund to plough €22m into San Leon Energy

Martin Hughes’ Toscafund will own a 41.5pc stake in San Leon Energy should a €22m investment be finalised
Martin Hughes’ Toscafund will own a 41.5pc stake in San Leon Energy should a €22m investment be finalised
Gavin McLoughlin

Gavin McLoughlin

One of Britain's richest hedge fund managers has pledged to invest €22m in Oisin Fanning's San Leon Energy.

Martin Hughes' Toscafund will own a 41.5pc stake in San Leon if the deal comes through. Hughes was recently named the UK's 9th richest hedge fund manager, with a fortune of £510m (€700m).

The move comes as San Leon has agreed to raise a total of €40m in a share placing that is subject to shareholder approval, a capital reorganisation and the granting of a Rule 9 waiver by the Irish Takeover Panel. The waiver would allow the deal to proceed without Toscafund having to make a takeover offer.

Fanning's firm is raising the money to allow it hold on to a 4.5pc net profit interest in the Barryroe field off Cork, the flagship asset of Tony O'Reilly Jr's Providence Resources.

"The company expects to benefit from considerable cash flow arising out of the net profit interest, in excess of $700m over the field life," San Leon said in a statement.

Fanning, the former chief executive of Smart Telecom, said "the proposed significant increase in Tosca's interest speaks volumes about their belief in the company's future and growth prospects.

"The funds will help transform San Leon into a cash-generating producer, and will bring other assets towards development."

San Leon made headlines last week after it was hit with an €18m judgment by the International Court of Arbitration of the International Chamber of Commerce.

The company was brought to arbitration by Dutch investment company Avobone, from which San Leon subsidiary Aurelian Oil & Gas aimed to buy the final 10pc of a Polish asset that Aurelian already 90pc owned.

San Leon said it will appeal the ruling to the UK Commercial Court.

"San Leon contested these claims robustly at the hearing of the Court of Arbitration and believed it had a material advantage in the case," the company said.

"In Aurelian's view, this loan was a standard industry practice mechanism that was used to fund Avobone's share of the drilling and other field-related costs in a tax-efficient manner - and should only have been repayable had Avobone exited after the field had generated sufficient cash-flow to repay the loan.

"As of the timing of Avobone's exit in early 2013, the field had yet to generate cash-flow. Following consultation with counsel, the company remains convinced that Avobone's case is substantially without merit... the company is thus filing an immediate appeal to the UK Commercial Court".

Sunday Indo Business

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