Oil and gas operator Parkmead Group said yesterday it remained confident of acquiring Lochard Energy despite dissent among some shareholders in the smaller firm.
Cornhill Capital said investors holding more than 25% of Lochard’s shares had indicated they planned to vote against Parkmead’s all-share deal worth £14.5milion.
The investment firm said Parkmead’s offer materially undervalued Lochard, and is understood to believe the oil firm is worth closer to £18million.
Its fellow rebel shareholders include Haydn Gardner, the former chief executive of Lochard who was ousted at an extraordinary meeting last year.
A spokesman for Parkmead said yesterday it was still confident it would gain shareholder support for the deal, however, and analysts played down the prospect of the operator raising its offer. Cornhill would need the support of investors holding more than half of Lochard’s shares to shoot down Parkmead’s bid.
Lochard’s board said yesterday the best way for the company to meet future obligations would be to become part of Parkmead. It said the Athena field – where Lochard holds a 10% stake – might require further investment to maximise production, adding that it also held three North Sea exploration licences which it could lose if it did not act on them soon.
The company’s directors warned investors that Lochard might not have enough cash to cover both drilling at the three exploration blocks and any further costs at Athena, adding: “The directors continue to believe, therefore, that the best way for Lochard shareholders to retain an interest in these three exploration licences would be to merge with a suitable partner, such as Parkmead.”
Alan MacPhee, of investment manager Brewin Dolphin, said he believed Parkmead would not be concerned by Cornhill’s posturing, adding: “Parkmead’s bid is a good opportunity for Lochard shareholders in the longer term.
“If Lochard wanted to go it alone it would need to raise the money, and in this market that is difficult to do no matter who you are. Parkmead has the money Lochard needs, and unless Cornhill receives support from some of the larger shareholders I cannot see it sweetening the deal.”
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