Petroceltic shareholder row flares up again

The bitter wrangle between Petroceltic International and its biggest shareholder, Swiss fund Worldview Capital, which failed with a bid to oust management in February, has flared up once again.

Worldview, which owns more than 28 per cent, is to ask the company to call an emergency general meeting of shareholders over Petroceltic’s plans to explore a $175 million bond issue secured on one of its prime assets in Algeria.

Worldview says the company, led by chief executive Brian O’Cathain, is “proposing to pledge the company’s crown jewel” because it has “run out of money”.

“Worldview is extremely concerned that such bond issuance will be perilous to shareholders,” it says, adding it fears bondholders might gain control of the asset if Petroceltic runs out of cash.

“The board’s proposal to issue such a 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,” it alleges.

It is unclear precisely what motions Worldview is proposing for the extraordinary general meeting, or whether it is legally possible for it to stop management issuing a bond via a shareholder vote.

Petroceltic this week announced an annual loss of $282 million due to exploration write-offs of $183 million on drilling in Kurdistan, Romania and Egypt and an impairment of $86 million.

Worldview, which previously failed in an attempt to oust Mr O’Cathain, described the figures as “yet another dismal set of operational and financial results from Petroceltic”. Petroceltic said investors had previously been made aware of the bond issuance proposal.

“Petroceltic’s long-term funding plan, including the intention to raise bond financing, has been well documented and clearly communicated, as recently as the capital markets day in January 2015,” it said.

The company insisted that “investors and the markets . . . outside of Worldview are supportive of this strategy”.