Fidelity International will oppose Maurel et Prom’s acquisition of Wentworth Resources, throwing the deal into question.
The deal requires approval from 75% of shares to go ahead. Fidelity has 11.87%, or around 21.18 million shares. The crucial vote is due to take place on February 23.
Maurel made the offer in December for Wentworth, proposing to pay 32.5 pence per share.
Wentworth, announcing the move from Fidelity, said it had made the offer in December for Wentworth, proposing to pay 32.5 pence per share. commitments of 23.14% in support of the deal.
Wentworth chairman Tim Bushell noted Fidelity’s position in opposing the Maurel deal. Despite this, he said, the board recommended “shareholders vote in favour” of the scheme at the court meeting and the relevant resolutions at the general meeting.
The Maurel offer was a 30% premium to the last business day before it was announced. However, various shareholders have raised concerns that it remains lower than Wentworth’s previous share price.
Noting concerns from shareholders, Wentworth secured an opinion from Institutional Shareholders Services (ISS) and Pensions & Investment Research Consultants (PIRC) earlier this month backing the deal. The two proxy advisors said shareholders should vote in favour of the deal.
Fidelity is the single largest shareholder in Wentworth. Other major shareholders include DNB Bank with 10.54%, Vitol with 9.49% and OVMK Vermogensbeheer with 7.41%.
Retail shareholders opposing the sale have said Fidelity would be crucial in blocking the deal.
Pool running dry
Wentworth warned in December that it was running down cost recovery under the production-sharing agreement (PSA). It is this recovery of more than $300mn of historic costs that has driven “strong cashflows” for Wentworth.
Given reduced investments in Mnazi Bay recently, Wentworth warned that there would be periods in 2023 where costs have been fully recovered. As such, it is facing “substantially lower revenues”.
Furthermore, Tanzania is investigating the cost pool for 2013 to 2015. This could “further impact revenue”, it warned.
Wentworth CEO Katherine Roe speaking in December, said that given this uncertain prospect it was an “opportune moment” for shareholders to sell.
One shareholder, Cliff Weight, took issue with how Wentworth’s position had suddenly changed. “There were years of positive statements and then suddenly they announce they’re happy to be taken over at a not particularly high price,” Weight said.
Wentworth’s management have failed to look after shareholders’ best interests, he continued. “It’s hugely disappointing, these are shareholders who are not in it for a short-term punt. These are long-term investors – and the directors elected not to represent those. The best we can get from these directors is a higher offer.”