SPANISH ENERGY group Iberdrola is to take a 22.64 per cent stake in Irish oil and gas exploration company Petroceltic.
Iberdrola, which is the world’s fourth-largest electricity company, is investing $55 million (€34.9 million) in Petroceltic through a placing of 216 million shares at 13 pence a share. The investment is being made in two tranches. Initially, Iberdrola is paying $37.6 million for a 16.67 per cent stake. The second tranche of $17.4 million for an additional stake will be completed in August 2008 after Petroceltic’s annual general meeting, subject to shareholder approval.
In addition, under a two-year option agreement, Iberdrola can invest a further $55 million to acquire a 49 per cent financing interest in any single asset in Petroceltic’s existing portfolio. An advance option consideration of $7.33 million in respect of this financing option is payable in cash in three months.
Under the terms of the agreement, the Spanish utility cannot sell any shares for three years and may not use its interest as a blocking stake in the event of an offer being made for Petroceltic.
Petroceltic said it would use the new funding and its existing cash resources to intensify and accelerate its exploration and appraisal assets, mainly in Algeria.
A joint business committee has been formed between the two companies to manage the alliance and an Iberdrola nominated non-executive director, Pablo Fuentes-Cantillana, has joined the Petroceltic board. Iberdrola will also second personnel to Petroceltic.
Iberdrola has operations in 40 countries worldwide and a market capitalisation of €42 billion.
“We are very pleased to have attracted and reached a strategic alliance agreement with Iberdrola, all the more so at a time when there is limited access to financial markets for companies at our stage of development,” said executive chairman Brian O’Cathain.
Davy Stockbrokers described the deal as “pivotal” for Petroceltic. “We see the deal as a significant validation of Petroceltic’s portfolio, and the alliance is expected to throw up high-value growth opportunities in future,” said analyst Job Langbroek.
Petroceltic also announced a pretax loss of $2.46 million for 2007, compared to a loss before tax of $4.69 million in 2007.
