4th Mar 2016 17:47
LONDON (Alliance News) - Worldview Capital Management SA has launched a petition to the High Court of Ireland to protect its investment in Petroceltic International PLC only hours after its takeover bid for the company was rejected by a fellow shareholder.
Worldview has now launched a petition under Irish law which protects Petroceltic from its creditors and allows discussions to be held about how the business could be restructured to transform the company into a sustainable operation.
That is significant as Petroceltic is due to repay its substantial debt before the end of Friday, and although its lenders had provided numerous extensions in the past, they were not guaranteed to offer Petroceltic with another one following the failed takeover attempt by Worldview earlier Friday.
Petroceltic responded late Friday, stating it was taking legal advice over the move by Worldview in the Irish Court.
Petroceltic Chairman Adair is also the chairman of Petroceltic's second largest shareholder, Skye Investments Ltd, which released a statement Friday stating it would not accept an offer from Worldview, the company's largest shareholder, because it is "substantially undervaluing" the company.
Skye had effectively taken the deal off the table by rejecting the offer, sparing the Petroceltic board from making a recommendation after Petroceltic released a statement Thursday that said the company was plagued in so much uncertainty it was not possible to support nor reject the bid.
"The company announces its firm intention not to accept the offer which it regards as substantially undervaluing Petroceltic and will not consider any further offers unless significantly increased," said Skye.
Worldview, with a 29.6% stake, needed to gain acceptance from a minimum of 90% of the shareholding of the company for its offer to go through. But with Skye's 19.2% stake in the company, the offer can not be approved.
The cash bid made by Worldview was 3.00 pence per Petroceltic share, which only valued the company at GBP6.4 million - a significant discount to its current value despite recent heavy hits to its share price.
Petroceltic shares were trading up 2.9% at 7.00 pence Friday afternoon following the announcement from Skye and the subsequent one from Worldview, giving Petroceltic a market cap of around GBP15 million.
Worldview launched a bid for the company after a lengthy battle which included an unsuccessful attempt to oust Petroceltic's chief executive and later making a series of accusations of corruption. The shareholder capitalised on Petroceltic's decision to launch a strategic review of the company back in December, when the severely discounted offer was made.
Worldview had claimed the offer was acceptable because the value of Petroceltic's equity is "close to zero", and has repeatedly highlighted concerns over the company's "precarious, and worsening, financial position".
Although that offer is now off the table, Petroceltic still has to resolve its financing woes. Petroceltic's lenders are currently extending the hefty debt repayments owed by the company in the hope it can find a buyer, partner or other financing, but the likelihood of that is challenged by the current downturn in the market.
Petroceltic Thursday said the strategic review continues, but added there is no guarantee another offer for the company will be made.
The current deadline for Petroceltic to repay its debt, which it simply can not do, is Friday. Petroceltic was hoping to secure yet another extension from its lenders, but Worldview has taken action on its behalf, launching a petition later Friday after its bid was rejected by Skye.
Although Petroceltic's cash balance stands at USD33.4 million, USD26.4 million of that is held in local currencies and is not readily convertible - giving it an effective cash balance of only USD7.0 million.
Its Senior Debt Facility is to the tune of USD230.0 million.
Worldview has refused to cave-in, and is aiming to get an examiner appointed to Petroceltic, which under Irish law would allow that examiner to put together a scheme of arrangement with creditors, with a view to allowing the company and its subsidiaries to trade as sustainable businesses post the examinership.
Worldview said that process would last for around 100 days, and said the court has declared an initial hearing will be held on April 4, when the court will be asked to approve the appointment of Michael McAteer of Grant Thornton Ireland as the examiner of Petroceltic.
Importantly, and possibly to the benefit of Petroceltic, the examinership process provides court protection over the company whilst discussions between the examiner and the creditors are ongoing. With that debt repayment due Friday, it means the company is protected from its creditors even if it misses the deadline.
The announcement concerning the examinership was released by Worldview's subsidiary, Sunny Hill, which stated Worldview EHS International Master Fund was the company to present the petition to the Irish Court.
That fund holds a 13.7% stake in Petroceltic.
Worldview EHS International said the objective of the examinership is to allow for the "restructuring of the business to create a sustainable business model, which Worldview believes is currently hampered by Petroceltic's sizeable indebtedness."
"The EHS Master Fund has decided to petition for examinership, as a last resort, in order to protect the company from its creditors, while seeking to ensure Petroceltic's long term viability," said Worldview.
"As long term shareholders of the company, it has always been Worldview's goal to support the company through the difficult times which it has faced, and continues to face, and this step is a continuation of its efforts so to do," it added.
Petroceltic responded late Friday, and said: "The company is taking legal advice in relation to the petition and a further announcement will be made in due course."
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews. Updated by Joshua Warner; [email protected]; @JoshAlliance
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