The increasingly bitter struggle between Petroceltic’s (PCI:AIM) incumbent management and its 29% shareholder Worldview Capital shows no signs of abating. Worldview, a hedge fund run by Angelo Moskov, is calling for an extraordinary general meeting (EGM) after Petroceltic revealed plans to raise $175 million through a bond issue earlier this week (29 Jun).
Management say the funds will be used to pay back $50 million of bank debt and finance development work but Worldview argues the flagship Ain Tsila asset in Algeria, against which the issue would be secured, is being put at risk.
For now the market is taking a relaxed view of the situation with the stock up 1.9% to 103.45p. The battle between the two parties has been going on for some time. In February Worldview sought to oust current chief executive Brian O’Cathain at an EGM but he survived.
At the time independent broker Westhouse suggested Worldview’s belligerent position reflected buyer’s remorse after investing heavily in the expectation that the company’s acquisition by Dragon Oil (DGO) would go through at the end of 2014. ‘Worldview is essentially stirring things up as the hoped-for 230p Dragon Oil bid fizzled out last year’, it commented.
Worldview set out its position in unequivocal terms today: ‘As predicted by Worldview in its EGM circular issued in February 2015, Petroceltic appears to have now run out of money. As a result it is proposing to pledge the company's crown jewel, namely its participation in the Ain Tsila asset, as a security for a contemplated $175 million bond issuance.
‘In our view, this will result in squandering shareholder value. 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 says it will ‘take all legal steps available’ to prevent the bond issue.
A Petroceltic spokesman responds: 'Petroceltic’s long-term funding plan including the intention to raise bond financing has been well documented and clearly communicated as recently as the Capital Markets Day in January 2015 to both investors and the market who outside of Worldview are supportive of this strategy.
‘Worldview appear to be renewing their attempts to gain board control that were clearly rejecting by shareholders at the recent EGM in February 2015.’