Petrel gets injunction preventing share sales by certain investors
Exploration group claims shares traded in breach of regulatory rules
Petrel Resources managing director David Horgan with company chairman John Teeling. Photograph: Brenda Fitzsimons
Oil and gas exploration firm Petrel Resources plc has obtained a temporary injunction preventing certain investors from unlawfully selling any newly-issued shares in the company.
In High Court proceedings, Petrel claims it entered an investment agreement last year with individuals who are experts in the area of fossil fuel exploration, believing that was a long-term agreement aimed at expanding its businesses.
Seeking the injunction on Friday, Gary McCarthy SC, for Petrel, said that as part of that deal, the investors entered into a ‘locked-in’ agreement not to sell any of their shares until August 2020.
Earlier this month, Petrel, with a registered address at Clontarf Road, Dublin, claims it discovered its shares have been unlawfully traded in breach of regulatory rules.
It claims the investors will not answer basic questions or provide straightforward information to explain why the allegedly unlawful trades have taken place. This is damaging, and will damage, the company’s reputation and business, it is claimed.
Chase Nominees Ltd, the alleged legal owner of the shares, is also a defendant.
The temporary injunction prevents the defendants, or any party with knowledge of the order, selling or transferring any newly-issued shares in the company.
The order also requires that Chase Nominees Ltd remain the registered owner of the newly-issued shares and that no steps are taken to change the registered owner of the shares.
The injunction was granted on Friday on an ex-parte basis, meaning one side only was represented, by Ms Justice Leonie Reynolds, who accepted the matter was urgent and could have serious implications for Petrel. She returned the matter to next week.
In seeking the order, Mr McCarthy said Petrel, which has projects in Ireland, Iraq and Ghana, had sought fresh investment so it could expand its business in the Middle East and North Africa.
The overall agreement was that shares representing a total of 47.5 per cent of the company’s share capital would be transferred, in two tranches, to the three named investors and to a company owned by Mr Fayad and Mr Mehraik, he outlined.
Counsel said the company discovered in early January some of its shares had been unlawfully transferred and sought explanations from the defendants.
It received correspondence from the investors’ solicitors stating they had not given any instructions for disposal of shares in Petrel. What concerned his client was that, in the response, reference was made to a US-registered firm which Petrel had not previously heard of, counsel said.
Following investigations, Petrel said the main investors had somehow pledged or charged some or all of the shares to this entity.
Petrel said it had sought further information about this entity, as well as undertakings from the investors, but had not received any substantive response.
It claims the alleged transfer of the shares is in breach of the locked-in agreement and that it cannot trust the investors’ assertions they are not responsible or unable to stop the shares from being traded.
The company had no option but to come to court and seek an injunction preventing any more shares being traded, counsel said.