Wednesday 22 November 2017

Worldview buys Petroceltic loans as battle nears end

Brian O'Cathain, CEO Petroceltic
Brian O'Cathain, CEO Petroceltic
Donal O'Donovan

Donal O'Donovan

The battle for control of Petroceltic looks to be approaching an endgame after dissident shareholder Worldview bought more than two thirds of the company's senior debt.

Worldview, which has already successfully initiated a campaign to have Petroceltic taken into examinership, is now both the biggest lender and the biggest shareholder of the stricken business.

Its Sunny Hill unit, wholly owned by the Swiss investment firm, announced last night that it has acquired 69.44pc of the Petroceltic Group's $232.5m of debt.

The debt has been bought at a "significant discount to face value", Worldview said.

That means banks have taken a loss to exit the business, and bodes badly for remaining shareholders because it suggests their equity in Petroceltic is now worth little or nothing.

Shares in Petroceltic are currently suspended from trading on the markets, and have fallen in price from €150 a share to €7 a share over the past year.

Michael McAteer of Grant Thornton was appointed as Petroceltic's interim examiner on Tuesday and is due back at the High Court for an examinership confirmation hearing on April 4.

Examinership is a court run process that gives an insolvent company 100 days of protection from creditors to put together a rescue package. If a rescue deal is signed off by the presiding judge debts can be wiped out to save the firm.

Worldview said it intends to approach Petroceltic and the interim examiner with a proposal to potentially swap the bank loans it now controls for equity in the company, as part of a wider restructuring - a so called loan-to-own strategy.

Management led by Brian O'Cathain have tried to fight off Worldview in the boardroom, at company meetings and in the courts for more than a year, but the battle now appears to be drawing to a close.

However, Worldview's hold over a huge slug of Petroceltic's debt isn't a "slam dunk" in the battle for control of the business, sources said last night.

In theory a bid for Petroceltic valued at more than the amount of the secured loans could still sway a judge - and would see Worldview reap a trading profit but not come away with control of the business.

However, impaired secured lenders have a huge say in blocking restructing proposals under examinership, which may well turn out to be the case here.

If it is, Worldview's new found dominance of the secured lender class means any rescue proposal it tables has a major chance of success.

Petroceltic is an irish headquartered oil and gas exploration and production company which operates in Algeria, Egypt, the Black Sea and Italy.

In December it announced that it had hired bankers to conduct a strategic review, including a possible sale of the business, and that it was relying on waivers from its lenders in order to avoid falling into default.

Its key assets in Algeria are the prize in the battle to control the business. Management is understood to have been close to a deal to sell Egyptian assets to finance the rest of the business. So far it is understood that the insolvency process being played out in Dublin has not affected any licences or mineral rights abroad.

Irish Independent

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