Petroceltic neither accepts nor rejects Worldview offer

Petroceltic International, an Irish oil and gas exploration and production company, still has not made a decision regarding an all cash offer made by Worldview in exchange for the entire share capital of Petroceltic, but urged its shareholders to take no action. 

Petroceltic said on Thursday that the company has considered the announcement made on February 26, 2016 by Sunny Hill, a company wholly owned by the Worldview Economic Recovery Fund, of its firm intention to make an all cash offer for the entire issued and to be issued share capital of Petroceltic other than the Petroceltic shares in the beneficial control of Worldview International Management Limited SEZC and/or any of the Worldview Funds at a price of 3 pence in cash for each Petroceltic share.

Under the terms of the offer, Petroceltic said that its shareholders would be entitled to receive 3 pence in cash for each Petroceltic share. The offer values the entire issued and to be issued share capital of Petroceltic at approximately £6.42 million ($9.03M).

According to Petroceltic, the offer will be conducted by way of a contractual takeover offer and will be conditional, inter alia, upon the receipt by Sunny Hill of valid acceptances in respect of not less than 90% of the Petroceltic shares not beneficially owned or controlled by Worldview, which as at the date of the offer announcement stood at approximately 29.6% of the company’s issued share capital.

The Board of Petroceltic, which has been advised by Davy, has considered the offer and has consulted with a number of stakeholders, including the company’s Lenders, the company stated on Thursday. In evaluating any offer, the Board must consider the risks and uncertainties relating to it, the company added.

The Board believes that the Offer undervalues the company on the assumption of its having appropriate long term funding in place.

In a statement on Thursday, Petroceltic explained: “The Board notes that the offer provides no information on how the company is to be funded during the offer period, to allow the completion of the offer. The offer also provides no information on the proposed treatment of the company’s senior bank facility both during the offer period and upon any change of control of the company, which, unless waived by the lenders or otherwise amended, would trigger an immediate repayment obligation in respect of all amounts owing under the senior bank facility.

“Petroceltic shareholders should be aware that there is no certainty that the company will continue to receive waivers from its lenders or that it will be able to secure funding on acceptable terms to enable it to complete the strategic review and/or the offer or achieve an outcome for Petroceltic shareholders that is superior to the offer. “

According to the company, the Board believes that the overall funding position of the company is a critical determinant of the value, if any, that may be realised through the strategic review and, given the Group’s current circumstances, there can be no certainty that Petroceltic shareholders will realise any value from their holding of Petroceltic shares.

The Board has concluded that it is not possible to give a firm recommendation to all Petroceltic shareholders at this time to either accept or reject the offer once made.

Petroceltic further said it believed that the offer undervalues the company on the assumption of its having appropriate long term funding in place.

“The Board therefore believes that the terms and conditions of the offer, combined with the current financial circumstances of the Group, create significant uncertainty regarding the ability for the offer to be completed in accordance with its terms. Based on these factors the Board has concluded that it is not possible to give a firm recommendation to all Petroceltic shareholders at this time to either accept or reject the offer once made.”

Petroceltic shareholders are therefore recommended to take no action at this time in relation to the offer, the company concluded.

To remind, Petroceltic in December initiated a formal strategic review of the company’s business and assets with a view to “considering all options to maximise value for shareholders and stakeholders”.

As part of this strategic review, Petroceltic engaged with interested parties on a number of potential transactions including, inter alia, a farm-out or sale of one or more of the company’s existing assets, a corporate transaction such as a merger with a third party or the sale of the entire issued, and to be issued, share capital of the company and the raising of capital in the form of debt and/or a subscription for new ordinary shares in the company by one or more third parties.