Petroceltic woes send shares down 5%

Vote volaltiy: Petroceltic shares hit by uncertainty over Dublin EGM

London-listed Petroceltic International saw its shares fall by more than 5% on Friday morning amid disappointing drill results and a row with a rebel shareholder.

The Dublin-headquartered explorer’s shares were trading at £1.52 on the Alternative Investments Market in the wake of its announcement of three unsuccessful exploration wells in Iraq, Romania and Egypt.

Petroceltic also came out fighting over shareholder Worldview Capital Management’s efforts to block a proposed $100 million placing by the explorer with a new strategic shareholder announced earlier this month.

The company has completed part of the placing but must gain shareholder approval at an extraordinary general meeting in Dublin's Royal College of Physicians on 9 June for the bulk of the new equity.

The placing would bring in Dovenby Capital, an investment vehicle of Malaysian offshore player Bumi Armada’s former deputy chairman Dato Ahmad Fuad, on an 8.8% share of Petroceltic for $50 million and see Fuad join the Petroceltic board.

However, Worldview Capital has rejected the scheme and wants to under-write the full placing instead.

The board of Petroceltic said it continued to see the placing as in the best interests of company and shareholders as a whole, rejecting the investment company’s criticism of its structure and arguing that Fuad was an attractive long-term strategic investor.

It said that if Worldview’s last-minute proposal had gone ahead “it would potentially have owned over 25% of Petroceltic, and would have gained blocking control over Petroceltic's activities”.

The company urged shareholders to back the placing resolution or risk an adverse financial and operational impact on Petroceltic if the deal does not go through.

Mark Henderson, analyst at Westhouse said that the drill disappointments and uncertainty over the proposal would cause share price falls in the short term, and said that “the volatility around the upcoming EGM could increase the prospect of M&A”.

He argued that Petroceltic's long-term prospects were good and that "Worldview's objective is to maximise its return in the shortest time possible, as it achieved with Exillon Energy in 2013”.

“The problem for Petroceltic is that Worldview now owns 20% of the company and will very likely be able to vote down the special resolution to approve the second tranche of the placing,” he said.

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