Petroceltic accuse shareholder of takeover bid

09 September 2015

Activist shareholder tries again to prevent borrowing

  • Petroceltic accuses largest shareholder, Worldview Capital Management, of driving down share prices to avoid paying fair value for shares
  • Petroceltic is working on developing $2bn Ain Tsila gas field in Algeria
  • Worldview is attempting to prevent Petroceltic from issuing debt to finance the development

Dublin-based Petroceltic has accused its largest shareholder, Switzerland’s Worldview Capital Management, of attempting to avoid paying fair value for a takeover by driving down Petroceltic’s share price.

A spokesperson for Worldview described the accusation as “ludicrous” and insisted that its actions were purely motivated by a disagreement on Petroceltic’s investment strategy for the $2bn Ain Tsila gas field in Algeria.

Resolutions restricting Petroceltic from contracting debt failed to pass at an emergency general meeting (EGM) called by Worldview on 7 September. The Swiss firm has called another EGM on 5 October to introduce new resolutions on Petroceltic’s debt plans.

A representative for Petroceltic denied the dispute was affecting its operations in Algeria.

The Irish company planned to issue $175m in senior secured bonds earlier in 2015, but postponed the issuance citing volatile market conditions.

The bonds would fund the development of the Ain Tsila field. Petroceltic holds a 38.25 per cent interest in the Isarene production-sharing contract for Ain Tsila, while Algeria’s state oil company Sonatrach holds a 43.375 per cent interest and Italy’s Enel owns a 18.375 per cent stake.

Algeria is attempting to reverse falling oil and gas exports by increasing gas production by 13 per cent by 2019.

Petroceltic tendered the main engineering, procurement and construction (EPC) contract for Ain Tsila on 19 August. Four companies prequalifed to bid.

Netherlands-headquartered Chicago Bridge & Iron (CBI) has carried out the front-end engineering and design (feed) work.

Petroceltic plans to spend $1.5bn on developing the field. About $600m of that investment will be before gas production begins in 2018. The firm has struggled to raise the finance to invest in the field, which represents more than 80 per cent of its proven and probable reserves. Worldview believes the investment should be just $500m.

“Worldview’s statement that it will not support any further financings by the company until the board and senior management resign clearly demonstrates its desire to gain control of the company without paying fair value, which is to the detriment of the majority of shareholders,” said a Petroceltic statement.

In August, Worldview published an open letter referencing a blog, which accused Petroceltic employees of corrupt procurement activities. Petroceltic petitioned the Irish High Court to remove the blog, and intends to take legal action against the blogger if identified.

Another blog has since appeared, making allegations regarding the company’s operations in Bulgaria.

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