Oil firm weighs EGM demand

The board of Irish exploration firm Petroceltic has 21 days to decide to call an EGM as requested by activist investor Worldview Capital Management.

Earlier this month, Worldview called for a shareholder vote on Petroceltic’s latest debt raising round. It is a Swiss-domiciled investment fund manager with a near 30% stake in the Irish firm.

Petroceltic said yesterday it has received a formal request for the shareholders’ meeting from Worldview and is duly taking advice on the matter. The company holds its regular AGM next Friday, but effectively now has three weeks to judge if the EGM call is legally viable. If so, the EGM must be held within the following two months.

Worldview also put out a lengthy statement yesterday outlining the resolutions it wants considered. Earlier this year, it tried and failed to oust Petroceltic’s CEO, Brian O’Cathain, and overhaul the company’s board. Worldview is questioning the legality of Petroceltic’s “unfettered” borrowing powers and wants clarity on the company’s bond issuance.

Earlier this month, Petroceltic announced plans to raise $175m (€157m) via a three-year maturity bond sale; the proceeds of which will go to paying off existing debt and covering capital expenditure needs for its headline asset, the Ain Tsila gas field in Algeria.

The company expects the debt raising to close this month, amid strong demand from investors, and claims its move has the support of shareholders. It is also likely to return to the bond markets next year for further funding for Algeria.

However, the current round is likely to see it borrow against an interest rate of 10% to 13%. Worldview has already claimed Petroceltic will not be able to repay the debt and will lose its 38% stake in Ain Tsila to its new creditors as a result.

It wants detailed explanation of how the company will repay the capital amount as well as the interest, and what security is being given to secure the bonds. However, no resolutions are being tabled regarding board membership.

“The proposal to issue its 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,” Worldview said.

Petroceltic has already said the Worldview move seems to be a renewed bid to gain board control.