3rd Jul 2015 06:45
LONDON (Alliance News) - Petroceltic International PLC Friday said it has been "consistent" in informing its shareholders about its financing plans after one of its largest shareholders threatened to block a proposed bond issue on Thursday.
Worldview Capital Management, which holds a 29% stake in the company, opened a new chapter in its ongoing battle with the management and board of Petroceltic over the company's plans to pledge its "crown jewel" asset as security for a USD175 million bond issue.
The new battle follows on from Worldview requisitioning an extraordinary general meeting earlier this year to try to oust Chief Executive Brian O'Cathain, a move which failed after shareholders narrowly supported O'Cathain.
On Thursday, Worldview had claimed Petroceltic had "run out of money" and therefore was placing its key asset, the Ain Tsila gas condensate field in Algeria, as security for the proposed bond issue, which Worldview described as "perilous to shareholders".
"Owing to the company's consistent inability to produce sufficient cash flows, proceeding with the bond issue on the announced terms would, in our view, likely result in bondholders eventually securing the world-class asset for a derisory sum," Worldview said Thursday.
Worldview said it would take "all legal steps available" to halt the bond issue "in order to prevent the company putting its core asset at risk with a wholly inappropriate and irresponsible financing strategy, until a major board overhaul has taken place to ensure viable strategies in the interest of shareholders are been implemented," seemingly referring back to the organisation's unhappiness that O'Caithain remains at the helm of Petroceltic.
On Friday, Petroceltic said the bond issue would "represent the first step in diversifying the group's funding base as part of its long-term financing plan for Ain Tsila," but clarified that further funding would be needed beyond the bond issue to develop Ain Tsila.
"The bond issue will represent an important addition to Petroceltic's overall financing mix," said Petroceltic. "Further funding will be required as the development of Ain Tsila progresses."
"Since 2013, Petroceltic has been consistent in disclosing its intention to consider such a bond issue or equivalent financing as part of its long-term plan to part finance the development of the Ain Tsila asset in Algeria," the company added.
"This financing strategy has been discussed extensively with shareholders, including Worldview. The bond issue will be undertaken in full compliance with all applicable legal and regulatory requirements," said Petroceltic.
Petroceltic plans to issue the bonds without shareholder approval, which Worldview called "an abuse of the unfettered borrowing powers" of the company and "poor corporate governance by the board". Worldview has the option to requisition an extraordinary general meeting, but on Friday Petroceltic said it has not received any such requisition.
On Thursday, Worldview also took aim at Petroceltic's 2014 results, saying both the operational and financial outcome for the company was "dismal". It said that in spite of a number of warnings and "constructive proposals" it has tabled, the company continues to "execute a failing strategy that has resulted in further shareholder value destruction."
Worldview also said it plans to file legal action against Petroceltic as soon as practicable in Irish courts, having seen its attempt to file in English courts rejected due to this not being the correct jurisdiction to hear the case. In the action, Worldview will be "seeking significant monetary damages for breach of this shareholder agreement."
On Friday, Petroceltic said: "The company's reporting of the May 2015 outcome of Worldview's legal proceedings has been confined to factual matters. Worldview has the right to appeal the decision of the English Courts, or to bring equivalent proceedings in Ireland, should it wish to do so."
By Joshua Warner; [email protected]; @JoshAlliance
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