Troubled oil and gas explorer Petroceltic has responded to the £6.4 million (€8.2 million) takeover bid from activist shareholder Worldview Capital, urging shareholders not to take any action.
Worldview Capital last Thursday proposed a £6.4 million offer for the company through its Cayman Islands-registered unit Sunny Hill. Sunny said it would offer 3 pence in cash per share for Petroceltic, an 83 per discount on the explorer's closing price of 18 pence the previous day.
On the advice of Dublin-based Davy Stockbrokers, Petroceltic advised shareholders to take no action. Petroceltic’s board said it believes that the offer “undervalues the company on the assumption of its having appropriate long term funding in place”.
Worldview, a 29 per cent shareholder in Petroceltic, has been in dispute with the company’s board for more than a year and has repeatedly tried to oust management and the board.
Petroceltic was recently granted a further waiver on its debts by lenders and says it retains their support.
In a statement issued on Thursday, the company said it believed the terms and conditions of Sunny’s offer, combined with the current financial circumstances of the group, created “significant uncertainty regarding the ability for the Offer to be completed in accordance with its terms.”
“Based on these factors the board has concluded that it is not possible to give a firm recommendation to all Petroceltic Shareholders at this time to either accept or reject the offer once made,” it said.
The group said the offer provided no information on how it would be funded to allow completion of the deal. It added the offer also gaves no details on the proposed treatment of the company’s senior bank facility.
“Petroceltic Shareholders should be aware that there is no certainty that the company will continue to receive waivers from its lenders or that it will be able to secure funding on acceptable terms to enable it to complete the strategic review and/or the offer or achieve an outcome for Petroceltic Shareholders that is superior to the offer,” it said.
“The board believes that the overall funding position of the company is a critical determinant of the value, if any, that may be realised through the strategic review and, given the group’s current circumstances, there can be no certainty that Petroceltic Shareholders will realise any value from their holding of Petroceltic shares. The board believes that the offer undervalues the company on the assumption of its having appropriate long term funding in place,” the group added.
Most analysts had expected the bid to be rejected with Cenkos saying many shareholders would likely see Worldview’s offer as “deeply insulting.”
Petroceltic said it continues to hold talks with a number of parties, on both asset sales and potential corporate transactions.
Angelo Moskov, director of Sunny Hill and chief executive of Worldview, said previously the offer provided Petroceltic shareholders with an all cash exit from "a high risk, distressed investment, against the background of unprecedented uncertainty in the oil and gas sector."
Earlier this week, Mr Moskov claimed to have seen documents showing that Petroceltic’s debt is for sale at discounts of up to 70 per cent.
