Oil and gas operator Parkmead Group said yesterday it would not sweeten the deal for Lochard Energy despite dissent among some shareholders in the smaller company.
Aberdeen-based Parkmead said it had reviewed Lochard’s assets and would not be improving on its all-share deal, worth £14.5milion, adding it had already received the backing of more than 41% of Lochard’s investors.
It follows Cornhill Capital claiming the offer undervalued Lochard, while the investment firm also said shareholders representing more than 25% of Lochard’s stock had indicated they planned to vote against the acquisition.
It is understood Cornhill believes the oil firm is worth closer to £18million. Other rebel shareholders include Lochard’s former chief executive Haydn Gardner.
Although Parkmead said it might increase its offer if a rival bidder came in for Lochard, it added that its smaller rival’s directors had already recommended the deal to shareholders.
Cornhill would need the support of investors holding more than half of Lochard’s shares to shoot down Parkmead’s bid.
Parkmead said: “Having undertaken full technical, financial and legal due diligence of Lochard Energy and its assets, the board believes that its offer . . . reflects fully the value of Lochard Energy.”
“Therefore, Parkmead confirms that its offer of 0.385 Parkmead shares for each Lochard Energy share is final, and that this offer will not be increased.”
Lochard’s board said previously the best way for it to meet future obligations, including potential investment in the North Sea Athena field – in which it holds a 10% stake – would be to become part of Parkmead. It added that it also held three North Sea exploration licences which it could lose if it did not act on them soon.
Parkmead shares closed 1.9% higher at 13p.
Uganda is aiming for commercial output of oil by 2016 at the earliest, as the landlocked east African nation seeks cheaper energy and funds for infrastructure projects.
Explorers struck oil in the country in 2006 and Uganda estimates its crude reserves at 3.5billion barrels, but wrangling over taxes and the viability of a local refinery have stalled production.
Uganda transports all its fuel in tankers over hundreds miles of road but principal petroleum exploration and production department geologist Fred Kabanda said a 30,000-barrel-a-day refinery was expected to be operational in 2016 at the earliest.
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