Petroceltic : Response to Worldview Announcements

Dublin

30 May 2014

Petroceltic International Plc

Response to Worldview Announcements

Petroceltic International plc ('Petroceltic' or 'the Company'), the upstream oil and gas exploration, development and production company focused on the Middle East and North Africa (MENA), the Mediterranean and the Black Sea regions today responds to the announcements issued by Worldview Capital Management LLP ('Worldview') in relation to the proposed Placing by the Company to raise $100 million. 

The Board of Petroceltic re-iterates that it considers the passing of the EGM Resolution and the completion of the Placing to be in the best interests of the Company and its Shareholders as a whole and will continue to seek to engage with Worldview in relation to the matters they have raised.

Petroceltic has always and will continue to uphold the interests of all its shareholders and the Board believes that these interests are best served by, inter alia, ensuring a diverse and balanced shareholder base, bringing new and valuable experience into the Company and maintaining high corporate governance standards.

Petroceltic strongly believes that the Placing is in the best interests of all shareholders and is a preferable alternative to its shareholders to that proposed by Worldview.

The Board of Petroceltic, whilst respecting the views of Worldview, believes that it should respond to a number of statements made in Worldview's recent public announcements.

Pre-emption rights

Worldview argued that Petroceltic failed to respect the pre-emption rights of shareholders.  In response:

·      The placing structure proposed by Petroceltic is one that is commonly used by public companies and widely accepted as providing a secure and swift method of raising funds. The Placing was conducted fully in accordance with all legal and regulatory requirements.

·      As part of the placing, the Company sought to offer as many shareholders as is allowable under securities legislation the opportunity to participate and was pleased to have received support from new and existing shareholders, including Worldview.

·      An offer to all shareholders, on a fully pre-emptive basis, as proposed by Worldview constitutes a public offer of securities and would require the publication of a prospectus with consequent cost and timetable implications.

·      Worldview had indicated its willingness to underwrite the entire $100 million placing. Had the Worldview proposal been accepted, it would potentially have owned over 25% of Petroceltic, and would have gained blocking control over Petroceltic's activities.

·      The Worldview proposal, which was not fully termed and therefore lacked certainty, was made the day before the placing was announced at which time the Board had already substantially agreed the placing arrangements.

·      Worldview's proposal to underwrite the share issue at £1.62 per share was approximately 3% higher than the price of £1.57 per share proposed in the placing, which in itself represented a premium to the closing price on the day prior to announcement. This price was set following a standard bookbuilding process, and included a preferential allocation to Worldview. The incremental shareholder dilution caused by Petroceltic's chosen strategy versus the Worldview proposal was minimal, representing 0.55% of the total shares in issue post placing. Petroceltic believes that bringing in a new strategic shareholder and a number of other new shareholders and thereby diversifying the shareholder base, is a better outcome for shareholders as a whole than a marginally higher placement price that would give one shareholder a potentially dominant position on the shareholder register.

The Board can confirm that it does not intend to issue further shares to Dovenby Capital ('Dovenby') through utilisation of any dis-application of pre-emption rights that may be agreed on at our forthcoming AGM.

New strategic investor

Details about Dovenby and Mr Dato Fuad, along with their previous experience in the oil and gas industry were clearly explained in the placing circular of 16 May 2014 which is available on the Company website ('the placing circular'). This also detailed the commitments Dovenby is willing to make to protect other shareholders' interests including:

·      A 180 day lock-in period for ownership of the shares.

·      A commitment by Dovenby not to increase its stake above 15% for three years without the Company's approval.

·      A willingness to establish a joint committee of Dovenby and the Company to investigate opportunities for strategic co-operation, with a view to exploring the possibility of a further strategic alliance to jointly seek additional oil and gas projects.

Petroceltic has carried out extensive due diligence on Mr Fuad, including several reference checks and disclosure of all his existing and previous oil and gas interests. Petroceltic's Board views Mr Fuad as a credible long term investor and a credible candidate to be a member of Petroceltic's Board. Mr Fuad's expertise is complementary to Petroceltic rather than in competition, making him an attractive strategic investor in the Company.

Worldview has questioned both Dovenby taking a shareholding in Petroceltic and also the agreement limiting Dovenby's shareholding to below 15% without approval from the Board of Petroceltic. The Board believes this agreement is in the best interests of shareholders and can confirm, on behalf of each member of the Board that they are not acting in concert with Dovenby and/or Messrs Fuad and Farish for the purposes of the Irish Takeover Rules.

Company strategy

Petroceltic's strategy has not changed and the Company has no current plans to expand its sphere of operation into Malaysia specifically or South East Asia more generally. As detailed in the placing circular, the relationship with Dovenby and Mr Fuad allows Petroceltic the ability to explore opportunities for strategic cooperation where it is in the interests of all the Company's shareholders and subject to the normal disclosure and shareholder approval requirements which apply to all transactions. Mr Fuad's experience in the provision of oil and gas services is complementary to Petroceltic's area of expertise rather than in competition with it.

Corporate governance

Petroceltic takes its corporate governance responsibilities extremely seriously. The 2013 Annual Report contains a detailed Corporate Governance Statement, which shareholders are encouraged to read.

The appointment of new directors is a matter for the Nominations Committee of the Board. The Nominations Committee periodically considers the appointment of new directors and will always consider suggestions from major shareholders consistent with the Company's desire to ensure it complies with corporate governance requirements on having a majority composition of independent directors, and that all Board members have expertise that will contribute to creating value for all shareholders.

Petroceltic's shareholders vote on the re-election of directors at AGM meetings and Petroceltic is putting all of its Directors up for re-election at the forthcoming AGM on 26 June. In addition, shareholders will have the opportunity to confirm or reject the Dovenby nominee in the normal manner at the appropriate time. 

The Company's thorough due diligence has confirmed there are no concerns as to whether Mr Fuad is suitable to be director of a company quoted on UK and Irish Public markets ; shareholders should note that he has already served as a director of a listed company  for a number of years.Any new director, whether nominated by Dovenby or otherwise appointed, would be remunerated in line with the level received by other non-executive directors of the Company.

All diligence required to be undertaken under the AIM Rules of the London Stock Exchange and the ESM Rules of the Irish Stock Exchange by Petroceltic's Nomad and ESM Adviser has been satisfactorily completed.

The Board can confirm explicitly that there are no disclosure obligations due from any Board member of any relationship with Mr Fuad/Dovenby, if there was such a relationship, it would have had to have been disclosed in the placing circular. Similarly, Petroceltic has no relationship with Bumi Armada Berhad or any other company associated with Dato Fuad or Dovenby.

Worldview

Petroceltic's management team has had regular communication with Worldview since it joined the Company's shareholder register in November 2011. This communication continued over the marketing stage of the placing process. The most recent meeting was on 23 May 2014 when the Company had what it believed to be constructive dialogue with Worldview's representatives.

In meetings with Worldview over the past number of years and in particular in recent months since it became a substantial shareholder, there has never been any indication that Worldview desires to nominate a director to the Company's Board. The Nominations Committee of the Board will always consider suggestions from major shareholders.

Placing and EGM

The Placing is made in two tranches. The First Tranche of the Placing consisted of a placing of 8,776,870 shares for cash at a price of £1.57 each, these shares were allotted on 21 May 2014 pursuant to the existing authority granted to the Directors by Shareholders at the Company's annual general meeting held on 30 May 2013.

The Second Tranche of the Placing consists of a conditional placing of 29,163,130 shares for cash at a price of £1.57 each, conditional upon the passing of the Resolution at the EGM, on Admission and on the terms of the Placing Agreement. If more than 75% of the votes cast are in favour, the resolution will be passed and it is expected that admission will occur and that dealings in the Second Tranche Shares will commence on AIM and ESM on or around 10 June 2014. If more than 25% of votes cast at the EGM are against, the Resolution will not be passed and the Second Tranche Shares will not be issued and the proceeds of the Placing to the extent applicable to the Second Tranche Shares will not be available to the Company.

As disclosed in the Company's announcement of 16 May 2014, failure by shareholders to pass the resolution at the EGM could potentially have a material adverse effect on the Company's business, prospects, financial condition and results of operations.

The Board is confident that the Company has provided appropriate disclosure of all relevant information to shareholders at the appropriate time and will continue to make further disclosure as required.

We urge shareholders to take the time to review the proposal outlined in the placing circular and this announcement and believe that the interests of all shareholders are best served by voting in favour of the Board's proposal at the EGM.

-Ends-

For further information, please contact:

Brian O' Cathain /Tom Hickey, Petroceltic International                                         Tel: +353 (1) 421 8300

Philip Dennis / Rollo Crichton-Stuart, Pelham Bell Pottinger                                   Tel: +44 (20) 7861 391   

Joe Murray / Joe Heron, Murray Consultants                                                        Tel: +353 (1) 498 0300

John Frain / Roland French, Davy (Nomad and ESM Adviser)                                 Tel: +353 (1) 679 6363

Notes to Editors:

Petroceltic International plc is a leading Upstream Oil and Gas Exploration and Production Company focused on the Middle East, North Africa, Mediterranean and Black Sea regions, and listed on the London Stock Exchange's AIM Market and the Irish Stock Exchange's ESM Market. The Company has production, exploration and development assets in Algeria, Egypt, Bulgaria, Romania, the Kurdistan Region of Iraq, Italy and Greece.