Pci8 Apr 2016 01:08
BACKGROUND
Strategic Review
On 23 December 2015, Petroceltic announced that it was initiating a formal strategic review of the Company's business and assets with a view to considering all options to maximise value for shareholders and stakeholders (the "Strategic Review"). As part of the Strategic Review, the Board, together with its advisers, engaged with interested parties on a number of potential transactions including, inter alia, a farm-out or sale of one or more of the Group's existing assets, a corporate transaction such as a merger with a third party or the sale of the entire issued, and to be issued, share capital of the Company and the raising of capital in the form of debt and/or a subscription for new ordinary shares in the Company by one or more third parties.
The Strategic Review was announced following a period of exceptionally challenging market conditions, especially for smaller oil and gas companies such as Petroceltic. Specifically, in its 2014 annual financial results released on 29 June 2015 and its 2015 half year results released on 30 September 2015, the Company stated that a combination of adjustments to reserves arising from the 2014 competent persons' reports for Egypt and Bulgaria, the drop in oil prices and a reduction in capital investment programmes in relation to the Group's assets in Egypt and Bulgaria had impacted on availability under the Group's Senior Bank Facility during 2015. These circumstances had led to the requirement to make material repayments, which the Group has not to date been in a position to satisfy and other breaches to the covenants of the Senior Bank Facility, which is secured over substantially all the assets of the Group.
On 3 March 2016, following the announcement on 26 February 2016 by Sunny Hill of its intention to make the Offer, the Company announced that it continued to have a constructive dialogue with its Original Lenders, who had supported the Strategic Review process through their provision of short-term financing and on-going waivers in respect of, inter alia, the requirement for the Company to make repayments under its Senior Bank Facility. The Company also noted that the then current waiver of repayments under its Senior Bank Facility would expire on 4 March 2016. The Company further stated that, based on relevant factors prevailing at that time, the Board had concluded that it was not possible at that time to give a firm recommendation to Petroceltic Shareholders to either accept or reject the Offer, once made.
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