Petroceltic investors wiped out under examinership scheme

Worldview Capital to gain full control for cash payment of $7.8m

Brian O’Cathain of Petroceltic International  at its EGM last September. Photograph: Dara Mac Dónaill

Brian O’Cathain of Petroceltic International at its EGM last September. Photograph: Dara Mac Dónaill

 

Worldview Capital, the Swiss- Cayman Islands hedge fund that is buying Petroceltic International out of examinership, is gaining full control of the business for a knockdown cash payment of $7.8 million.

Creditors of Petroceltic will meet next Monday to vote on a scheme of arrangement assembled by the examiner, Michael McAteer of Grant Thornton. The scheme is certain to pass as Worldview is also the biggest creditor.

The scheme was published yesterday on the website of Petroceltic, whose directors had been involved in a bitter dispute with Worldview for more than 18 months before the exploration company entered examinership in March.

Working capital

The scheme outlines how, in addition to the cash injection from Worldview, the fund will provide up to $100 million over the next three years to fund working capital for Petroceltic, whose main asset is a share of a gas field in Algeria.

The 9,034 shareholders will be effectively wiped out, eliminated for a nominal payment of 31 cent each.

The company’s secured debt of $240.8 million will be subject to a $1 million haircut. Prior to the examinership, this was effectively bought out at a massive discount by Worldview and Elbrus Capital, another Cayman fund.

Secured debt

As most of the secured debt remains owing, Worldview, which paid banks about 30 per cent for its share of the loans, potentially stands to make a huge profit if it is paid back in full by Petroceltic over time.

A payment of 5 per cent of the sum owed will be handed over to unsecured creditors whose total debts are $14.6 million, more than 90 per cent of which is due to Hess, a multinational oil company with which Petroceltic explored for oil and gas in Kurdistan.

All employees and contractors will get 5 per cent of what they are owed. All share options, meanwhile, will be eliminated for a nominal payment to each option holder of €1, wiping out some of the paper wealth of senior managers.

The examinership is expected to conclude in mid-June. On the scheme’s execution date the Petroceltic board will step down, to be replaced by nominees of Worldview.

Worldview emerged as a dissident shareholder in Petroceltic in 2014. It blocked Petroceltic from raising new equity, while it was also locked out of bond markets as oil collapsed. Worldview then bought out its debts, putting it in control of Petroceltic’s destiny, culminating in the examinership.