Rival bid possible after Regal agrees £77m cash offer

Regal Petroleum plc has agreed terms on a £77m recommended cash offer from Energees Investments Limited, main holding company of Ukraine's Smart Holding Group.

However following the announcement Cyprus-incorporated Heamoor Limited confirmed its interest in Regal.

Under the offer from Energees, shareholders will receive 24p in cash for each Regal share, a 92% premium to the closing price of 12.5p on November 24 before the start of the offer period.

Regal remains subject to a suspension order by the Ukrainian Ministry of Environmental Protection in relation to its operations at the MEX-GOL and SV fields.

As previously announced, following court rulings against it the company has shut-in its operations at these fields, resulting in the suspension of production and loss of revenue.

The company announced the results of a strategic review following the disappointing results of its 2009/2010 drilling campaign.

It concluded that development of the Ukrainian asset would require further technical studies, including the trialling of alternative technologies for well completion.

Regal has agreed to pay Saipem €5.1m to terminate two contracts for the drilling rigs, plus €9.0m to release the company from all other obligations and liabilities.

Regal chairman Keith Henry said, 'Against the background of operational, legal and funding challenges faced by the company, and following the results of our strategic review, your board is pleased to have reached agreement with Energees Management and intends unanimously to recommend shareholders accept the proposed offer.

'The offer provides greater certainty of value to Regal shareholders during this difficult time for the company.'

Heamoor said it had carried out significant due diligence on Regal and had been in discussions with the board on a possible a cash offer.

It was also looking at the alternative of a potential combination of the Regal assets and the assets of Geo-Alliance via an acquisition of Geo Alliance by Regal.

Heamoor and Geo Alliance were currently considering their options in light of the announcement by Energees today (Dec 13).

A further announcement would be made as appropriate.

All the shares in Heamoor and Geo Alliance are held by two discretionary trusts created for the benefit principally of Victor Pinchuk and family members. Geo Alliance is a leading private oil and gas producer in the Ukraine.

Regal shares were up 2p at 26.25p

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