2nd Jul 2015 08:29
LONDON (Alliance News) - Worldview Capital Management opened a new chapter in its ongoing battle with the management and board of Petroceltic International PLC, issuing its response to the company's 2014 results and its USD175 million bond proposal.
Worldview has been waging a war with Petroceltic's board over the company's corporate governance, specifically 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.
Worldview, which holds a 29% stake in Petroceltic, said that as it predicted, Petroceltic appears to have "run out of money" and, as result, is proposing to pledge its "crown jewel", namely its participation in the Ain Tsila asset, as security for a USD175 million bond issue.
Ain Tsila is a gas condensate field in Algeria.
"Given the company's past history of very poor financial management and false claims, Worldview is extremely concerned that such bond issuance will be 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.
"The board's proposal to issue such a secured bond without shareholder approval is an abuse of the unfettered borrowing powers in the company's articles of association and represents yet another example of poor corporate governance by the board. We note that the company has failed to amend these inappropriate borrowing powers as part of the new articles of association it is proposing to adopt at the upcoming AGM," it added.
Worldview said it will 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."
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."
It 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."
Petroceltic has not yet responded to Worldview's announcement.
Petroceltic shares were up 1.9% to 103.45 pence on Thursday.
By Sam Unsted; [email protected]; @SamUAtAlliance
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