Acceptances fall short
DNO extends ‘full, fair and generous’ offer for Faroe
DNO says its offer is ‘full fair and even generous’
Norwegian oil firm DNO has raised its stake in Aberdeen-based Faroe Petroleum to 43%, short of the 57.5% needed to give it a required majority shareholding.
DNO has extended the offer of 152p per share – valuing the company at £608 million – by two weeks to 16 January.
Faroe’s board and management have urged shareholders to reject the offer, arguing that it substantially undervalues the company. It published independent analysis yesterday suggesting a price range of 186p to 225p per share is a more accurate reflection of value.
DNO, which held 29.9% of AIM-quoted Faroe’s shares before launching its bid on 26 November, said it has received additional acceptances representing 13.1% of the issued share capital of Faroe.
In today’s statement it says that during this period, the UK AIM index has fallen by 9%, the Brent spot oil price has fallen by 11% and the average Brent futures oil prices for 2019 and 2020 have fallen by 11% and 9%, respectively.
“After careful consideration, including factoring in the likely challenge facing some shareholders to act during the Christmas and New Year holiday, DNO has decided to extend the Offer for a further 14 days.”
If its offer lapses, DNO cannot make a new bid for 12 months and it says there can be no assurances as to its ambitions in these “depressed” markets.
“Whether DNO achieves its acceptance condition or not, its goal will continue to be to safeguard DNO’s significant investment in Faroe,” it said.
“DNO will redouble efforts to replace entrenched directors and achieve appropriate board representation for the owners of Faroe to achieve greater transparency and scrutiny; improvement of corporate governance practices; informed and proactive shareholder “say on pay” and to prevent further dilutive actions, including large, off-market options awards to the executive directors.”
It describes its offer as “full, fair – and in retrospect, even generous ” and says it provides Faroe shareholders with a rare opportunity to exit their relatively illiquid holdings in Faroe at an attractive price in volatile and uncertain oil and equities markets.
Faroe shareholders, including the executive directors who hold significant numbers of shares, options and matching shares awarded or available for award through Faroe’s various schemes, “should consider where Faroe shares will trade if DNO’s Offer lapses and what prices larger blocks of shares can command given Faroe’s relatively illiquid AIM-listed position.”
DNO’s executive chairman Bijan Mossavar-Rahmani said: “Even if DNO’s offer lapses or is allowed to lapse, DNO is not going away.
“For too long shareholders have given the Faroe board of directors a free pass. Starting with our first acquisition of shares, shareholders holding some 43% of Faroe’s shares have voted with their feet by seeking to exit all or part of their positions either through sales to DNO or by accepting our offer.
‘Whatever the outcome of this offer process, we will make every effort, through regular communication and engagement, to encourage our fellow shareholders who remain invested to vote their shares going forward not by proxy but proactively.”