OREANDA-NEWS. July 06, 2015. Worldview Capital Management, an investment management group which holds more than 29% of the share capital in Petroceltic International Plc ("Petroceltic" or the "Company"), today announces its response to Petroceltic's 2014 financial results and its \\$175 million secured bond proposal, along with an update on Worldview's legal proceedings against the Company.

Proposed bond issuance

As predicted by Worldview in its EGM circular issued in February 2015, Petroceltic appears to have now run out of money.  As a result it is proposing to pledge the Company's crown jewel, namely its participation in the Ain Tsila asset, as a security for a contemplated \\$175 million bond issuance. In our view, this will result in squandering shareholder value.

Given Company's past history of very poor financial management and false claims, Worldview is extremely concerned that such bond issuance will be perilous to shareholders. Owing to the Company's consistent inability to produce sufficient cash flows, proceeding with the bond issue on the announced terms would, in our view, likely result in bondholders eventually securing the world-class asset for a derisory sum.

The board's proposal to issue such a secured bond without shareholder approval is an abuse of the unfettered borrowing powers in the Company's articles of association and represents yet another example of poor corporate governance by the board.   We note that the Company has failed to amend these inappropriate borrowing powers as part of the new articles of association it is proposing to adopt at the upcoming AGM.

Worldview has offered numerous times to work with major global investors, some of which form Worldview's own investor base, to provide or arrange financing to meet the Company's operational requirements provided that certain members of the current board resign.  Today we re-iterate this offer and position.  

EGM

Worldview will actively take all legal steps available to stop the bond issuance in order to prevent the Company putting its core asset at risk with a wholly inappropriate and irresponsible financing strategy, until a major Board overhaul has taken place to ensure viable strategies in the interest of shareholders are been implemented.

In particular, Worldview announces today that it intends to requisition an EGM for shareholders to determine the fate of this bond and to adopt appropriate limits on the Company's borrowing powers in accordance with good corporate governance. 

2014 results

Worldview notes yet another dismal set of operational and financial results from Petroceltic.

Regrettably, and despite a number of warnings and constructive proposals from Worldview  presented in numerous  meetings with management and contained in its EGM circular issued in February 2015  the Company's management continues to execute a failing strategy that has resulted in further shareholder value destruction.

The Company's revised production guidance of 14-15Mboepd represents a 33-38% decline against the already unacceptably low production achieved in 2014. Such a rapid drop in production volumes in mature fields poses the obvious question as to whether the wells are adequately managed and operated to their potential.  Yet, despite these operational failings and significant reserves, production and revenue downgrades, the Company plans to spend \\$167m in capex in 2015.

Legal case

Worldview notes the misleading manner in which the Company reported on Worldview's legal proceedings against the Company for failure to conduct a corporate and strategic review of the business in accordance with the shareholder agreement between the Company and Worldview. This may be simply an attempt to mislead current investors and potential bondholders on the status of the legal case.  The English High Court proceedings were dismissed solely on the basis that English courts were not the appropriate jurisdiction, but rather Irish courts, in which to bring the case, and not, as the Company implied, as a result of any finding in favour of the Company on the merits of Worldview's claim. It is Worldview's intention to file legal proceedings against the Company in an Irish court as soon as practicable seeking significant monetary damages for breach of this shareholder agreement.