TIDMPCI
RNS Number : 2809U
Petroceltic International PLC
06 April 2016
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART
IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A
VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT
JURISDICTION
Dublin
6 April 2016
Petroceltic International Plc
("Petroceltic" or the "Company")
Publication of Response Circular
On 26 February 2016, Sunny Hill Limited, a company wholly owned
by the Worldview Economic Recovery Fund, ("Sunny Hill") announced
the terms of an all cash offer to be made by it for the entire
issued and to be issued share capital of Petroceltic other than the
Petroceltic Shares in the beneficial ownership or control of
Worldview International Management Limited SEZC ("Worldview")
and/or any of the Worldview Funds (the "Offer").
The Offer, which is subject to the terms and conditions set out
in the Offer Document and the Form of Acceptance, is being made on
the following basis:
for each Petroceltic Share 3 pence in cash.
On 4 March 2016, Worldview EHS International Master Fund,
presented a petition to the Court to appoint an examiner to
Petroceltic International plc, Petroceltic Investments Limited and
Petroceltic Ain Tsila Limited (together the "Petition Companies")
and to admit such companies to the protection of the Court pursuant
to the relevant provisions of the Companies Act 2014 (the
"Petition"). As a result of the Petition, the Petition Companies
are currently in Examinership, which is an Irish company law rescue
procedure for companies that are either insolvent or close to
insolvency, involving a court enforced moratorium on creditor
action.
On 10 March 2016, Sunny Hill announced that the Worldview
Economic Recovery Fund had acquired 69.44 per cent. of the Group's
outstanding indebtedness in respect of the Senior Bank Facility. On
4 April 2016, Sunny Hill announced that, on 2 April 2016, the
Worldview Economic Recovery Fund disposed of 32 per cent. of the
Petroceltic Group's outstanding indebtedness in respect of the
Group's Senior Bank Facility to an independent third party investor
and that the Worldview Economic Recovery Fund remains interested in
37.44 per cent. of the Senior Bank Facility.
On 24 March 2016, Sunny Hill published the Offer Document in
respect of the Offer.
The Board of Petroceltic (the "Board") today announces the
publication of a circular setting out the views of the Board in
relation to the Offer (the "Response Circular"). The Board, having
regard to the facts set out in the Response Circular and
specifically the likely outcomes for Shareholders on conclusion of
the Examinership process, as described more fully in the Response
Circular, and having been so advised by Davy Corporate Finance,
recommends that Shareholders accept the Offer as soon as
practicable but, in any event, by no later than 1.00 p.m. (Irish
time) on 14 April 2016. In providing advice to the Board, Davy
Corporate Finance has taken into account the commercial assessments
of the Board.
The Response Circular is published in accordance with Rule
25.1(a) of the Irish Takeover Rules and a copy will be posted to
Petroceltic shareholders shortly. Copies of the Response Circular
will also be available shortly on the Company's website at
www.petroceltic.com, while the Offer remains open to
acceptances.
Part I (Letter from the Chairman) of the Response Circular is
reproduced in full below. Shareholders are advised to read the
Response Circular carefully and in full.
The Offer Document is available on Sunny Hill's website,
www.sunnyhill.co (for the avoidance of doubt, the contents of that
website are solely the responsibility of Sunny Hill and are not
incorporated by reference into, nor do they form any part of, this
announcement).
Terms and expressions used in this announcement shall, unless
the context otherwise requires, have the same meanings as given to
them in the Response Circular.
For further information, please contact:
Petroceltic International plc:
Tel: +353 (1) 421 8300
Brian O'Cathain
Tom Hickey
Davy Corporate Finance:
Financial Adviser & Corporate Broker to Petroceltic
Tel: +353 (1) 679 7788
John Frain
Roland French
Bell Pottinger:
Joint PR Adviser to Petroceltic
Tel: +44 (20)3772 2500
James Henderson
Rollo Crichton-Stuart
Murray Consultants:
Joint PR Adviser to Petroceltic
Tel: +353 (1) 498 0300
Joe Heron
Douglas Keatinge
Important Information
The Directors of Petroceltic International plc accept
responsibility for the information contained in this announcement.
To the best of their knowledge and belief (having taken all
reasonable care to ensure that such is the case), the information
contained in this announcement is in accordance with the facts and
does not omit anything likely to affect the import of such
information.
Davy, which is authorised and regulated in Ireland by the
Central Bank, is acting exclusively for Petroceltic and for no one
else in connection with the matters set out in the Response
Circular. In connection with such matters, Davy, its affiliates and
its and their respective directors, officers, employees and agents
will not regard any other person as their client, nor will they be
responsible to anyone other than Petroceltic for providing the
protections afforded to its clients or for providing advice in
connection with the contents of the Response Circular or any matter
referred to herein.
A person interested in 1% or more of any class of relevant
securities of Petroceltic may have disclosure obligations under
Rule 8.3 of the Irish Takeover Rules.
Notes to Editors
Petroceltic International plc is an upstream oil and gas
exploration and production company, with licences in North Africa,
the Mediterranean and Black Sea regions, and listed on the London
Stock Exchange's AIM Market and the Irish Stock Exchange's ESM
Market. The Company has production, exploration and development
assets in Algeria, Egypt, Bulgaria and Italy.
Appendix - Letter from Robert Adair, Non-Executive Chairman of
Petroceltic
To the Shareholders, and, for information only, to the Option
Holders
Dear Shareholder,
Response to the all cash offer by Sunny Hill for Petroceltic
1. INTRODUCTION
On 26 February 2016, Sunny Hill Limited, a company wholly owned
by the Worldview Economic Recovery Fund, ("Sunny Hill") announced
the terms of an all cash offer to be made by it for the entire
issued and to be issued share capital of Petroceltic other than the
Petroceltic Shares in the beneficial ownership or control of
Worldview International Management Limited SEZC ("Worldview")
and/or any of the Worldview Funds.
On 24 March 2016, Sunny Hill published the Offer Document in
respect of the Offer. The Offer Document is available on Sunny
Hill's website, www.sunnyhill.co (for the avoidance of doubt, the
contents of that website are solely the responsibility of Sunny
Hill and are not incorporated by reference into, nor do they form
any part of, this document).
The Offer, which is subject to the terms and conditions set out
in the Offer Document and the Form of Acceptance, is being made on
the following basis:
for each Petroceltic Share 3 pence in cash.
The Offer is being conducted by way of a contractual takeover
offer and is conditional, inter alia, upon the receipt by Sunny
Hill prior to 1.00 p.m. (Irish time) on 14 April 2016 of valid
acceptances in respect of not less than 90 per cent. of the
Petroceltic Shares not beneficially owned or controlled by
Worldview and/or any of the Worldview Funds, which as at the date
of the Offer Document stood at approximately 29.6 per cent. of the
Company's issued Ordinary Shares.
Petroceltic, along with PIL and PATL, (together, the "Petition
Companies") are currently in Examinership. Examinership is an Irish
company law rescue procedure for companies that are either
insolvent or close to insolvency, involving a court enforced
moratorium on creditor action.
In principle, it is possible that a potential acquirer of, or
investor in, the Group (including Worldview) might, as an investor
under any proposals put forward under the Examinership process or
as part of a separate restructuring outside the Examinership
process, agree to discharge all outstanding liabilities of the
Petition Companies as at the time of presentation of the Petition
and to allow Shareholders to retain all or some of their Ordinary
Shares following that transaction becoming effective. The Board
believes, and has been advised, that this is unlikely to occur.
Further, even in the unlikely circumstance where Shareholders were
allowed under any transaction to retain all or some of their
Ordinary Shares, the Board believes that such transaction would
result in significant dilution to existing holdings of Ordinary
Shares. In any event, the Board believes, and has been advised,
that, for the reasons set out in the Response Circular, it is far
more likely that any proposals put forward under the Examinership
process will (if confirmed by the Court) result in the
restructuring of the outstanding liabilities of the Petition
Companies (including Petroceltic) as at the date of presentation of
the Petition and will also provide for all existing Ordinary Shares
(other than Ordinary Shares held by any person who agrees to invest
in the Company under the Proposals) to be cancelled for no
consideration.
The Board of Petroceltic, having regard to the
facts set out in the Response Circular and specifically
the likely outcomes for Shareholders on conclusion
of the Examinership process as described more
fully in the Response Circular, and having been
so advised by Davy Corporate Finance, recommends
that Shareholders accept the Offer as soon as
possible but, in any event, prior to 1.00 p.m.
(Irish time) on 14 April 2016. In providing advice
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to the Board, Davy Corporate Finance has taken
into account the commercial assessments of the
Board.
---------------------------------------------------------
2. BACKGROUND
2.1 Strategic Review
On 23 December 2015, Petroceltic announced that it was
initiating 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 (the "Strategic Review"). As part of
the Strategic Review, the Board, together with its advisers,
engaged with interested parties on a number of potential
transactions including, inter alia, a farm-out or sale of one or
more of the Group'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.
The Strategic Review was announced following a period of
exceptionally challenging market conditions, especially for smaller
oil and gas companies such as Petroceltic. Specifically, in its
2014 annual financial results released on 29 June 2015 and its 2015
half year results released on 30 September 2015, the Company stated
that a combination of adjustments to reserves arising from the 2014
competent persons' reports for Egypt and Bulgaria, the drop in oil
prices and a reduction in capital investment programmes in relation
to the Group's assets in Egypt and Bulgaria had impacted on
availability under the Group's Senior Bank Facility during 2015.
These circumstances had led to the requirement to make material
repayments, which the Group has not to date been in a position to
satisfy and other breaches to the covenants of the Senior Bank
Facility, which is secured over substantially all the assets of the
Group.
On 3 March 2016, following the announcement on 26 February 2016
by Sunny Hill of its intention to make the Offer, the Company
announced that it continued to have a constructive dialogue with
its Original Lenders, who had supported the Strategic Review
process through their provision of short-term financing and
on-going waivers in respect of, inter alia, the requirement for the
Company to make repayments under its Senior Bank Facility. The
Company also noted that the then current waiver of repayments under
its Senior Bank Facility would expire on 4 March 2016. The Company
further stated that, based on relevant factors prevailing at that
time, the Board had concluded that it was not possible at that time
to give a firm recommendation to Petroceltic Shareholders to either
accept or reject the Offer, once made.
2.2 Presentation of Petition, suspension of trading in
Petroceltic Shares and status of Petition
On 4 March 2016 Worldview EHS International Master Fund, a
member of the Worldview Group, presented a petition to the Court to
appoint an examiner to the Petition Companies and to admit such
companies to the protection of the Court pursuant to the relevant
provisions of the Companies Act 2014 (the "Petition"). The full
hearing of the Petition was then scheduled for 4 April 2016. No
application was made to appoint an interim examiner at the time of
presentation of the Petition. The Petition was made without any
prior consultation with or advice to the Company. At the time of
presentation of the Petition to the Court on 4 March 2016, the
Company had substantially agreed with its Original Lenders the
commercial terms and conditions of a further waiver to 18 March
2016. However this waiver could not be concluded in light of the
presentation of the Petition and as a consequence a significant
proportion of the Senior Bank Facility fell due for immediate
repayment.
Given the significant uncertainties in relation to the Group's
financial circumstances arising from the Petition and the failure
to conclude a further waiver, the Company applied for its Ordinary
Shares to be suspended from trading on AIM and ESM with effect from
7.30 a.m. on Monday 7 March 2016. That suspension continues and,
given the likely outcomes of the Examinership as described in
paragraph 3 below, the Board believes that it is unlikely that
trading in its Ordinary Shares on AIM and ESM will re-commence.
On 9 March 2016, Petroceltic announced that the Court had
approved the application for the appointment of Mr. Michael McAteer
of Grant Thornton (the Proposed Examiner under the Petition) as the
interim examiner to the Petition Companies (the "Interim
Examiner"), pending the full hearing of the Petition.
On 10 March 2016, Sunny Hill announced that the Worldview
Economic Recovery Fund had acquired 69.44 per cent. of the Group's
outstanding indebtedness in respect of the Senior Bank Facility. As
at close of business on 9 March 2016, being the latest practicable
date prior to that announcement, the total amount outstanding
pursuant to the Senior Bank Facility (including accrued interest)
was approximately US$232.5 million.
On 16 March 2016, an application was made by the Worldview EHS
International Master Fund and Petroceltic for Court protection and
the appointment of Mr Michael McAteer of Grant Thornton Ireland as
examiner, on an interim basis, in respect of Petroceltic Resources
plc (a subsidiary of Petroceltic). The application was heard by the
Court on 18 March 2016. The Court declined to make an order
extending the examinership to Petroceltic Resources plc but
indicated that it was open to a further application regarding this
company at a later stage.
On 24 March 2016, Sunny Hill published the Offer Document in
respect of the Offer.
On 4 April 2016, counsel for Worldview EHS International Master
Fund requested a short adjournment for the Petition hearing
scheduled for that day. The hearing of the Petition is currently
scheduled for Friday, 8 April 2016. However, on 4 April 2016, the
Court confirmed the extension of court protection for the Petition
Companies until 8 April 2016.
On 4 April 2016, Sunny Hill announced that, on 2 April 2016, the
Worldview Economic Recovery Fund disposed of 32 per cent. of the
Petroceltic Group's outstanding indebtedness in respect of the
Group's Senior Bank Facility to an independent third party investor
and that the Worldview Economic Recovery Fund remains interested in
37.44 per cent. of the Senior Bank Facility.
3. ABOUT THE EXAMINERSHIP PROCESS
3.1 Basis for appointment of an examiner or an interim examiner
Examinership is a rescue procedure under the Irish Companies
Acts for a company that is either insolvent or close to insolvency
that, on a successful conclusion of the process, usually involves
new investment into the company and a forced write down of the
company's liabilities. The examiner's proposals (see further at
paragraph 3.3 below) must be presented to the court within 100 days
from the date of presentation of the petition to appoint the
examiner. During this time, there is a prohibition on any
enforcement action being taken by any creditor (including secured
creditors) against the company. Court protection can be extended
beyond this 100 day period if the confirmation hearing (at which
the court will decide whether to confirm the examiner's proposals)
takes place after the initial 100 day period has concluded.
Under the Irish Companies Acts, a petition to appoint an
examiner can be presented by a number of parties, including any
member of a company holding at least 10 per cent. of the paid up
capital of the company. This was the basis on which Worldview EHS
International Master Fund stated that it presented the Petition to
Court on 4 March 2016. Following presentation of the Petition, the
Court fixed 4 April 2016 as the date for the hearing of the
Petition.
If it is appropriate to do so, a court can appoint an interim
examiner pending the hearing of the petition to appoint the
examiner. In the case of the Petition Companies, as was noted
above, the Court did not appoint an interim examiner on
presentation of the Petition on 4 March 2016, but on 9 March 2016,
following a joint application by the Company and Worldview EHS
International Master Fund, the Court appointed the Interim Examiner
to the Petition Companies.
On 4 April 2016, counsel for Worldview EHS International Master
Fund requested a short adjournment for the Petition hearing
scheduled for that day. The hearing of the Petition is currently
scheduled for Friday, 8 April 2016. However, on 4 April 2016, the
Court confirmed the extension of court protection for the Petition
Companies until 8 April 2016.
3.2 Petition to appoint the Proposed Examiner and consequences
for Shareholders if the Proposed Examiner is not appointed
At the hearing of the Petition, creditors and members of the
Petition Companies will be afforded the opportunity to make
representations to the Court in respect of the application to
appoint the Proposed Examiner to the Petition Companies. The Court
will generally refuse to appoint an examiner at the hearing of a
petition if it cannot be demonstrated that such an appointment will
facilitate the survival of the relevant company. If the Court were
to refuse to appoint the Proposed Examiner to the Petition
Companies, then in circumstances where such companies were
insolvent, without the prospect of securing further funding, the
directors of the each Petition Company would need to take immediate
steps to place the relevant Petition Company into liquidation. The
Board believes that if an order was to be made for the winding up
of Petroceltic in those circumstances, it would be very unlikely
that Shareholders would realise any value with respect to their
holdings of Ordinary Shares.
3.3 The role of the Proposed Examiner (if appointed)
The main role of the Proposed Examiner (if appointed) (being the
"Examiner") with respect to each Petition Company will be to:
-- examine the Petition Company's finances;
-- establish what parts of the Petition Company's business can be rescued; and
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-- negotiate with investors, creditors and other relevant
stakeholders in order to prepare proposals for a compromise or
scheme of arrangement that will facilitate the Petition Company's
survival (the "Proposals").
During the Examinership Period, each Petition Company must
continue to meet its debts and liabilities as they arise.
Once the Examiner has formulated the Proposals (if any), he will
convene meetings of separate classes of members and creditors of
each Petition Company, at which meetings the members and creditors
of each Petition Company will consider those Proposals insofar as
they relate to that Petition Company. Each class of member and
creditors for each Petition Company will have separate meetings and
must then vote either in favour of or against those Proposals. When
all of the class meetings have been held, there will be a hearing
of those Proposals before the Court, which must sanction the
Proposals before they become binding on the members and creditors
of each Petition Company.
The Court will not confirm any Proposals with respect to a
Petition Company unless:
(a) at least one class of creditors of the Petition Company
whose interests or claims would be impaired by implementation of
the Proposals with respect to that Petition Company has accepted
the proposals, and
(b) the Court is satisfied that:
(i) the Proposals are fair and equitable in relation to any
class of members or creditors of the Petition Company that has not
accepted the Proposals and whose interests or claims would be
impaired by implementation; and
(ii) the Proposals are not unfairly prejudicial to the interests of any interested party,
and in any case shall not confirm any Proposals if the sole or
primary purpose of them is the avoidance of payment of tax due. If
confirmed, the Proposals with respect to a Petition Company will
become binding on the members and creditors of that Petition
Company regardless as to how those members and creditors voted at
the respective meetings.
With respect to any meeting of Petroceltic Shareholders to
consider any Proposals made by the Examiner for a compromise or
scheme of arrangement relating to Petroceltic, you should be aware
that (i) such meeting will be convened by the Examiner (and not by
the Company) and accordingly the usual notice requirements for a
meeting of Shareholders convened by the Company will not apply
(and, in fact, under the applicable Court rules, the Examiner will
be obliged to give the relevant members and creditors a minimum of
three days' notice only) and (ii) a vote by Shareholders to reject
any Proposals would not bind the Court and the Court would be free
to subsequently confirm those Proposals (subject to it being
satisfied as to the matters set out at sub-paragraphs (a) and (b)
above).
If any Proposals with respect to one or more Petition Companies
are approved by the Court, the Court protection for the relevant
Petition Company would be lifted on the date that the Court
appoints for the compromise or scheme of arrangement with respect
to the Petition Company to come into force.
3.4 Consequences for Shareholders if the Proposed Examiner is
appointed and (a) his Proposals are confirmed by the Court; (b) no
Proposals are forthcoming or (c) those Proposals are not confirmed
by the Court
As at the time of presentation of the Petition on 4 March 2016,
Petroceltic had outstanding liabilities in excess of US$250
million.
The Company has been advised that if any Proposals made by the
Examiner with respect to Petroceltic were to envisage the
impairment of any interest or claim of any creditor of Petroceltic
as at the date of presentation of the Petition, then it would be
very likely that those Proposals would also envisage that, if the
Proposals were subsequently to be approved by the Court, all
Ordinary Shares (other than Ordinary Shares held by any person who
agrees to invest in the Company under the Proposals) would be
cancelled for no consideration.
The Board notes the statement by Sunny Hill in its Offer
Document (at page 11) that:
"Worldview intends to approach Petroceltic and the interim
examiner with a proposal to restructure the Senior Bank Facility,
as part of a wider restructuring of Petroceltic's capital
structure, either pursuant to an examinership scheme of arrangement
or as a standalone restructuring, which, amongst other
consequences, could lead to the cancellation of the entire issued
share capital of Petroceltic for no consideration and/or the
potential conversion of a significant proportion of the outstanding
debt into new ordinary shares in the capital of Petroceltic and
consequent dilution for existing Petroceltic Shareholders."
In principle, it is possible that a potential acquirer of, or
investor in, the Group (including Worldview) might, as an investor
under any proposals put forward under the Examinership process or
as part of a separate restructuring outside the Examinership
process, agree to discharge all outstanding liabilities of the
Petition Companies as at the time of presentation of the Petition
and to allow Shareholders to retain all or some of their Ordinary
Shares following that transaction becoming effective. The Board
believes, and has been advised, that this is unlikely to occur.
Further, even in the unlikely circumstance where Shareholders were
allowed under any transaction to retain all or some of their
Ordinary Shares, the Board believes that such transaction would
result in significant dilution to existing holdings of Ordinary
Shares. In any event, the Board believes, and has been advised,
that, for the reasons set out in the Response Circular, it is far
more likely that any proposals put forward under the Examinership
process will (if confirmed by the Court) result in the
restructuring of the outstanding liabilities of the Petition
Companies (including Petroceltic) as at the date of presentation of
the Petition and will also provide for all existing Ordinary Shares
(other than Ordinary Shares held by any person who agrees to invest
in the Company under the Proposals) to be cancelled for no
consideration.
Further, if:
-- the Examiner is unable to formulate any viable Proposals to
ensure the survival of a Petition Company; or
-- any Proposals with respect to a Petition Company are not confirmed by the Court; or
-- a Petition Company is unable to continue to discharge its
debts and liabilities during the Examinership Period,
the Court is likely to exercise its jurisdiction to make an
order for the winding up of the Petition Company.
The Board believes that if an order was to be made for the
winding up of Petroceltic, it would be very unlikely that
Shareholders would realise any value with respect to their holdings
of Ordinary Shares.
4. VIEWS OF THE PETROCELTIC BOARD ON THE SUNNY HILL OFFER
The Offer values the entire issued and to be issued share
capital of Petroceltic at approximately GBP6.42 million. The Offer
Price of 3 pence for each Petroceltic Share represents a discount
of approximately:
-- 60.0 per cent. to the Closing Price of 7.5 pence per
Petroceltic Share on 4 March 2016, being the last trading day prior
to the suspension of Petroceltic Shares from trading on AIM and
ESM;
-- 83.3 per cent. to the Closing Price of 18.0 pence per
Petroceltic Share on 25 February 2016, being the last trading day
prior to the date of the announcement of the Offer by Sunny
Hill;
-- 73.9 per cent. to the Closing Price of 11.5 pence per
Petroceltic Share on 21 January 2016, being the last trading day
prior to the date of the announcement released by Worldview, via
Worldview Capital Management, regarding a possible offer for the
Company; and
-- 89.4 per cent. to the Closing Price of 28.375 pence per
Petroceltic Share on 22 December 2015, being the last trading day
prior to the announcement of the Strategic Review process.
Notwithstanding the above stated discounts, the Board believes
that any assessment of the merits of the Offer must be made having
regard to the following matters:
(a) the Board believes, and has been advised, that there are
only two realistic outcomes to the Examinership process for the
Petition Companies, being:
(i) a successful outcome for all the Petition Companies (i.e.
the Proposed Examiner is appointed and he then makes Proposals that
are confirmed by the Court), in which case the Board believes, for
the reasons set out at paragraph 3 above, that those proposals
would very likely result in all Ordinary Shares held by Petroceltic
Shareholders (other than Ordinary Shares held by any person who
agrees to invest in the Company under the Proposals) being
cancelled for no consideration; or
(ii) an unsuccessful outcome for all the Petition Companies
(i.e. the Proposed Examiner is not appointed or he is appointed and
(A) no Proposals are forthcoming or (B), if they are forthcoming,
those Proposals are not confirmed by the Court or (C) the Petition
Companies are unable to continue to trade), in which case the
result is likely to be immediate commencement of winding-up of the
Petition Companies and, in which case the Board believes, for the
reasons set out at paragraph 3 above, that it would be very
unlikely that Shareholders would realise any value with respect to
their holdings of Ordinary Shares; and
(b) the Board believes that it is unlikely there will be an
offer for the entire issued and to be issued share capital of
Petroceltic other than the Offer by Sunny Hill for the following
reasons:
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(i) subsequent to the announcement of the Strategic Review on 23
December 2015, Sunny Hill made the Offer, thereby highlighting to
any potential offeror that Worldview has, by virtue of the number
of Ordinary Shares held by Worldview and the Worldview Funds, the
ability to block any such potential offeror from acquiring 100% of
the existing Ordinary Shares and, to date, no competing offer or
possible offer has been made or announced; and
(ii) in any event, given that Petroceltic is currently in an
Examinership process, the Board believes that any potential
acquirer of, or investor in, the Group other than Worldview would
be far more likely to invest through that process (given the
potential benefits offered by the statutory process) rather than by
way of an offer to acquire the entire issued and to be issued share
capital of Petroceltic.
Accordingly, the Board, having regard to the above beliefs,
facts and likely outcomes, recognises that the Offer represents the
best possible opportunity for Shareholders (other than any
Shareholder who may invest in the Company under any Proposals) to
realise any value from their holding of Ordinary Shares and
therefore, having being so advised by Davy Corporate Finance,
recommends that Shareholders accept the Offer. In providing advice
to the Board, Davy Corporate Finance has taken into account the
commercial assessments of the Board.
Notwithstanding its recommendation, the Board highlights that
the Offer is highly conditional and that there is no certainty that
the Offer will complete and that Shareholders will receive the
Offer Price for their Ordinary Shares. Importantly, as noted above,
the Offer is conditional upon receipt of a very high level of
acceptances of the Offer (i.e. receipt by Sunny Hill prior to 1.00
p.m. (Irish time) on 14 April 2016 of acceptances in respect of not
less than 90 per cent. of the Petroceltic Shares not beneficially
owned or controlled by Worldview and/or any of the Worldview Funds)
(the "Acceptance Condition"). While Sunny Hill may, under the terms
of the Offer, reduce the Acceptance Condition or extend the
deadline for its satisfaction, it is under no obligation to do so,
unless the Panel otherwise directs.
Accordingly, if Shareholders intend to accept
the Offer, the Board recommends that they do
so as soon as possible, but in any event, such
that a valid acceptance in respect of their Ordinary
Shares is received by Sunny Hill in accordance
with the terms of conditions of the Offer prior
to 1.00 p.m. (Irish time) on 14 April 2016.
------------------------------------------------------
In addition, the Board notes that, in its Offer Document, Sunny
Hill has specifically reserved its right to invoke those conditions
of its Offer relating to default under the Group's debt facilities
or insolvency of members of the Group and other matters, including
its right to invoke such conditions in circumstances where an
examiner issues a notice to convene a meeting of creditors of
Petroceltic to consider proposals for a compromise or scheme of
arrangement in relation to Petroceltic which involves the
cancellation of all, or substantially all, of the Petroceltic
Shares Affected. Any such invocation of conditions would require
the consent of the Panel under the Irish Takeover Rules.
Accordingly, in making its recommendation to Shareholders to
accept the Offer, the Board highlights that there is no certainty
that the Offer will complete and that Shareholders will receive the
Offer Price for their Ordinary Shares. In making any decision to
accept the Offer, Shareholders should be fully aware of those
risks.
5. VIEWS OF THE PETROCELTIC BOARD ON SUNNY HILL'S PLANS FOR
PETROCELTIC AND ITS EMPLOYEES
As required by the Irish Takeover Rules, the Board's views on
the effects of implementation of the Offer on all Petroceltic's
interests including, specifically, employment and on Sunny Hill's
strategic plans for Petroceltic and their likely repercussions on
employment on the locations of Petroceltic's places of business,
are set out below. In fulfilling its obligations under the Irish
Takeover Rules, the Board can only comment on the details provided
in the Offer Document.
The Board notes that, on the Offer becoming wholly
unconditional, Sunny Hill plans to undertake a comprehensive review
of all of Petroceltic's operations "with a view to materially
improving the Petroceltic Group's efficiency and significantly
reducing its cost base" (see page 13 of the Offer Document).
Sunny Hill has not provided any detailed plans, save for its
intention to undertake a comprehensive review, and therefore the
Board is unable to comment on the effect of implementation of the
Offer on Petroceltic's interests or Sunny Hill's strategic plans
for Petroceltic.
Sunny Hill states that, subject to completion of its review
process, it currently expects to "significantly reduce the
Petroceltic Group's staffing levels which may also involve the
closure of some of the Petroceltic Group's existing offices and
facilities in order to significantly reduce operating costs" (see
also page 13 of the Offer Document).
The Board notes that Sunny Hill has confirmed that the existing
rights and terms and conditions of employment, including pension
obligations, of the management and employees of Petroceltic and its
subsidiaries will be observed at least to the extent required by
law as part of this review process.
6. RECOMMENDATION
The Board of Petroceltic, having regard to the
facts set out in the Response Circular and specifically
the likely outcomes for Shareholders on conclusion
of the Examinership process as described more
fully in the Response Circular, and having been
so advised by Davy Corporate Finance, recommends
that Shareholders accept the Offer as soon as
possible but, in any event, prior to 1.00 p.m.
(Irish time) on 14 April 2016. In providing advice
to the Board, Davy Corporate Finance has taken
into account the commercial assessments of the
Board.
---------------------------------------------------------
The Chairman, Robert Adair, together with Skye, holds in
aggregate the beneficial interest in 41,136,078 Petroceltic Shares,
representing approximately 19.2 per cent. of the current issued
share capital of Petroceltic. Prior to presentation of the Petition
to appoint the Proposed Examiner on 4 March 2016, Robert Adair had
stated that neither he nor Skye intended to accept the Offer.
Having regard to the significant change in circumstances affecting
the Company by virtue of the Examinership process and as outlined
in the Response Circular, Robert Adair and Skye now intend to
accept the Offer. Mr Adair also joins with the other Directors in
recommending that Shareholders accept the Offer.
Brian O'Cathain and Tom Hickey, whose beneficial holdings of
Petroceltic Shares amount to, in aggregate, 727,047 Petroceltic
Shares, representing approximately 0.34 per cent. of the current
issued share capital of Petroceltic, intend to accept the
Offer.
Alan Parsley, whose beneficial holding of Petroceltic Shares
amounts to 11,608 Petroceltic Shares, representing approximately
0.005 per cent of the current issued share capital of Petroceltic,
does not intend to accept the Offer. Dr. Parsley nonetheless joins
with the other Directors in recommending that Shareholders accept
the Offer.
Yours faithfully,
ROBERT ADAIR
Chairman
ENDS
This information is provided by RNS
The company news service from the London Stock Exchange
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