Irish firm Circle Oil hoists ‘for sale’ sign with strategic review

Irish exploration firm, Circle Oil, has effectively placed itself up for sale, by initiating an “all options” strategic review to reduce debt, maintain sufficient cash-flow, and maximise shareholder value.

The company — which is active in northern Africa — has debt of $77.5m (approximately €70m), of which $57.5m is due for repayment, but has been waived by chief lender, the International Finance Corporation (IFC), until April 15, with further waivers possible.

Circle yesterday announced an all-encompassing strategic review, which will consider the sale of assets, an equity raise, or an entire sale of the company.

Circle’s chief executive, Mitch Flegg, said the repayment waiver is “a welcome development” that gives the company headroom to progress the review, and “to put in place a sustainable, long-term financing structure for the business.”

“Circle has excellent assets across our regions of operation, and our aim — mindful of the sustained, low oil-price environment and the company’s stressed financial position — is to maximise the value from these assets for the benefit of all stakeholders,” he added.

Analysts at Cenkos Securities, in London, yesterday noted that Circle’s assets were of good quality, but expressed concern about its lenders remaining patient and giving management time to address the company’s problems.

In particular, Cenkos expressed worry about IFC’s commitment to the exploration and production sector, having been part of the lending group that recently sold Petroceltic debt to its chief independent director, investment firm, Worldview.

Circle’s share price fell 20% yesterday. The company, as of the end of December, had cash of $10m.