Dublin-based Petroceltic has decided to delay issuing $175m of senior secured callable bonds.

The debt is intended to fund the development of the Isarene block in the Ain Tsila gas field in Algeria.

It cited volatile bond market conditions, which prevented the company from achieving acceptable terms for its bonds.

It insisted the market response had been favourable, and that the bond issuance would go ahead.

“The company has engaged with a broad group of international institutional credit and industry investors to discuss their appetite to participate in the bond issue,” Petroceltic said in a press release.

“The company has received positive confirmation of its strategy and outlook, as well as the quality of the company’s interest in the Isarene production-sharing contract.”

The bond issuance would refinance up to $50m of Petroceltic’s outstanding bank debt, finance development capital expenditure and be used for general corporate purposes.

Norway’s Pareto Securities has been appointed as sole manager and bookrunner for the bond issuance.

Petroceltic also stated the planned issuance would clash with the transfer of its Ain Tsila interest to a special project vehicle, Petroceltic Ain Tsila, over the next few weeks. Once the transfer is complete, investors should have more clarity and confidence in the security for the bonds. The security is expected to be Petroceltic’s 38.25 per cent stake in the Isarene block.

The delay is being seen as a concession to ‘dissident’ shareholder, Switzerland-based Worldview Capital Management, which owns 29.9 per cent of Petroceltic shares. It fears the bond issuance “will result in squandering shareholder value” by risking the Ain Tsila stake. However, Petroceltic can issue the bonds without consulting shareholders.

The Swiss firm is involved in a long-running battle with Petroceltic over its strategy. On 24 July, Worldview filed a suit against Petroceltic in the Irish High Court over its alleged failure to carry out a review of the company.

A previous lawsuit in the English High Court was thrown out for being in the wrong jurisdiction, and Petroceltic was awarded costs.

Algeria’s state-owned Sonatrach owns 43.38 per cent interest in the Isarene block and Italy’s Enel owns the remaining 18.37 per cent.  Contractors are currently prequalifying for a field development contract.

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.