Petroceltic said it is unable to give shareholders a firm recommendation to either accept or reject the 3pence per share offer from Sunny Hill capital to buy the company.
The Irish independent, whose main asset is the Ain Tsila gas field in Algeria, has advised shareholders take no at present in relation to the offer.
Sunny View, a vehicle for activist investor Worldview Capital made an offer to buy the business in total for £6.4million – a figure that Petroceltic earlier this week described as “insulting” and around 30% of its current market capitalisation. The 3p per share offer is a 78% discount on its current share price of 13.75pence.
Worldview believes the value of Petroceltic’s equity is “close to zero”.
Petroceltic Thursday said the main concern surrounding the offer is the absence of any information about what Worldview would do about the company’s $230million lending facility should its offer be successful.
“The board therefore believes that the terms and conditions of the offer, combined with the current financial circumstances of the group, create significant uncertainty regarding the ability for the offer to be completed in accordance with its terms,” said Petroceltic.
“Based on these factors the board has concluded that it is not possible to give a firm recommendation to all Petroceltic shareholders at this time to either accept or reject the offer once made,” the company added.
“Petroceltic shareholders are therefore recommended to take no action at this time in relation to the offer”.
Petroceltic placed itself up for sale, and is considering a potential merger, selling off some of its assets, or sourcing partners for those projects to help fund and progress them. It is also looking to secure debt financing.
In a stock market statement, it outlined the risks within the Sunny Hill/Worldview proposal: “The board notes that the offer provides no information on how the company is to be funded during the offer period, to allow the completion of the offer.
“The offer also provides no information on the proposed treatment of the company’s senior bank facility both during the offer period and upon any change of control of the company, which, unless waived by the lenders or otherwise amended, would trigger an immediate repayment obligation in respect of all amounts owing under the senior bank facility.
“Petroceltic shareholders should be aware that there is no certainty that the company will continue to receive waivers from its lenders or that it will be able to secure funding on acceptable terms to enable it to complete the strategic review and/or the offer or achieve an outcome for Petroceltic shareholders that is superior to the offer.”