Petroceltic board steps down after examinership approval

Amended survival scheme reflects improved deal for the company’s staff

 Brian O’Cathain has resigned as chief executive of Petroceltic. Photograph: Dara Mac Donaill / The Irish Times

Brian O’Cathain has resigned as chief executive of Petroceltic. Photograph: Dara Mac Donaill / The Irish Times

 

Petroceltic chief executive Brian O’Cathain and chief financial officer Tom Hickey have resigned from the company after the High Court today approved an amended survival scheme for the exploration firm and two related companies.

A statement from the troubled explorer said Petroceltic’s board has stepped down and the company’s existing share capital been cancelled following conclusion of the examinership process.

Cancellation of Petroceltic shares from the AIM and ESM, which have been suspended from trading since early March will become effective as of tomorrow.

“We look forward to working with the Petroceltic team to ensure the long term success of the company as it develops its assets,” said Angelo Moskov, chief executive of Worldview in a statement after the Cayman Islands-based fund took control of the explorer.

Earlier today the High Court approved the amended survival scheme, There was no opposition to the scheme when it was put before Mr Justice Brian McGovern from 12.30pm on Thursday.

There was no opposition to the modified scheme when it was put before Mr Justice Brian McGovern from 12.30pm on Thursday.

Secured lenders, employees (who will do better under the modified scheme), and other creditors either supported the scheme or adopted a neutral posihtion.

All of the company’s senior staff, about 30 people, had voted against the original scheme at creditors meetings and later hired lawyers to advance their objections to the scheme.

After negotiations between the sides this week, modifications were agreed which will see the employees getting 20 per cent of entitlements (which had been estimated at some €3.6 million) under “change of control” clauses in their employment contracts, rather than the 5 per cent originally proposed. They have also been assured the notice provisions of their contracts will be honoured.

Not objecting

On that basis, their lawyer John O’Donnell SC said they were not objecting to the modified scheme.

The court was told another modification to the scheme is that Dana Petroluem, following an agreement, will no longer be treated as a creditor of the company and will instead stand outside the scheme.

Seeking approval for the scheme, Michael Collins SC, for examiner Michael McAteer, said it had also been agreed there will be a change in management of the company and the investor’s nominees will be appointed to the Board.

Two new directors, including Worldview’s Angelo Moskov, along with an alternate director, will be appointed, he said. There will also be a new company secretary.

Counsel outlined the scheme provides that the investor will provide up to $100 million (€89 million) in working capital to Petroceltic over the next three years and will also subscribe for 150 million new ordinary shares.

Creditors will get 5 per cent of sums owed and creditors who claimed benefits under change of control clauses would get 20 per cent.

Before Petroceltic International and related companies Petroceltic Investments Ltd and Petroceltic Ain Tsila Ltd were placed under court protection last March, on the petition of Worldview brought without notice to Petroceltic, its secured debt of $240.8 million was bought out at a large discount by Worldview and Elbrus Capital, another Cayman fund.

Support

Petroceltic later said it would support examinership but rejected criticism in the petition of the management of the company.

An independent expert’s report, by Pearse Farrell of Duff and Phelps (Ireland) Ltd, has expressed the view Petroceltic has a reasonable prospect of survival as a going concern provided certain conditions, including securing investor funding and approval of a scheme of arrangement, are met.