Saturday 20 January 2018

Worldview renew legal action amid call for EGM

Brian O'Cathain, chief executive of Petroceltic
Brian O'Cathain, chief executive of Petroceltic

Paul O'Donoghue

Activist investor Worldview has said that it is planning to block a planned €158m funding round by Irish oil explorer Petroceltic while simultaneously renewing its legal action against the company.

Worldview Capital Management is a Swiss-based hedge fund run by Angelo Moskov and the largest shareholder in Petroceltic with a 29pc stake.

Yesterday it called for an emergency general meeting after Petroceltic announced earlier this week that it intends to raise $175m (€158m) through a bond issue.

The bond issue is intended to be used mainly to fund its share of capital spending at its Ain Tsila gas project in Algeria, on which it is leading development. Capital expenditure is set to hit $2bn over the lifetime of the project. Worldview now wants an EGM so that shareholders can "decide the fate" of the proposed bond financing, which Woldview claims will put the company's stake in the Ain Tsila gas project at risk.

Worldview said: "Owing to the company's consistent inability to produce sufficient cash flows, proceeding with the bond issue on the announced terms would, in our view, likely result in bondholders eventually securing the world-class asset for a derisory sum."

Worldview says it will "take all legal steps available" to prevent the bond issue. It is understood that Petroceltic has not yet received a formal request to stage an EGM. A spokesman for Petroceltic said: "Petroceltic's long term funding plan, including the intention to raise bond financing, has been well documented and clearly communicated, as recently as the capital markets day in January 2015, to both investors and the markets who, outside of Worldview, are supportive of this strategy."

The move comes just months after Worldview called an EGM in an attempt to oust Petroceltic CEO Brian O'Cathain, who survived with 61pc of the vote.

In another sign of the increasingly fractious relationship between the companies, Worldview also said that it intends to pursue legal proceedings in Ireland against Petroceltic. In May last year Worldview raised objections to the terms around a $100m share placing. In return for its support for the placing Petroceltic agreed, among other measures, to undertake a strategic review of the business.

The hedge fund had legal proceedings dismissed in the English High Court in May. The proceedings alleged that Petroceltic had failed to undertake a review of its business and sought direction from the court as to the manner in which the review was completed. For its part Petroceltic has maintained that it has undertaken a suitable strategic review of the business.

Worldview says that it intends to file proceedings in an Irish court "as soon as practicable" and is "seeking significant monetary damages for breach of this shareholder agreement."

Although the company declined to comment on the proposed litigation, it is understood that Petroceltic would be prepared to contest any legal action.

Irish Independent

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