Clyde makes late plea for loyalty
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.Clyde Petroleum issued a last-ditch plea for loyalty yesterday, writing to its shareholders in a late bid to undermine the 120p final offer launched by Gulf Canada last Tuesday.
Despite a point-by-point rebuttal of many of Gulf's claims, however, its share price remained resolutely stuck at the new offer price and analysts continue to believe the Canadians may have done just enough to tip the balance in their favour.
After 50 days of acrimonious tit-for-tat between the two companies, Gulf finally increased its original 105p offer last week, increasing the value of its bid from pounds 432m to just under pounds 500m. Clyde's fate is expected to be decided by a handful of large institutional shareholders, four of which own half the oil producer's shares. Although some have previously said they would be unwilling to accept less than 135p, it is now felt that, in the absence of a higher offer from a white knight, 120p may just win the day.
Roy Franklin, managing director of Clyde, said: "Clyde has delivered, is delivering and will continue to deliver. Our strategy is working, as borne out by our 1996 results. What we have achieved is only a foretaste of what we aim to achieve in the future. I firmly believe our shareholders are better off rejecting this offer."
Having been forced under Takeover Panel rules to hold its fire after day 39 of the bid to give Gulf a week to marshal its final arguments, Clyde returned to the offensive in the letter, accusing Gulf of "seeking Clyde's valuable cash flow to help support its substantial debt burden".
According to Clyde, Gulf has net debts of about pounds 1.1bn, even after two equity issues in the past 12 months. "This huge pro forma net debt would represent some 3.5 times Gulf Canada's estimated pro forma 1997 discretionary cash flow. With these financial constraints on Gulf Canada, Clyde's shareholders should not be surprised that Gulf Canada is not prepared to offer full value for Clyde shares."
Gulf Canada dismissed Clyde's latest contribution to the bitter debate between the two: "Clyde's latest document smacks of desperation.
"Its comments about Gulf Canada's balance sheet are irrelevant for a cash bid and ill-conceived."
In its final offer Gulf made much of the assumptions employed by ERC, the oil consultant commissioned by Clyde to evaluate its asset value.
Clyde defended them yesterday as conservative and pointed out that some were the same as those used by SSI, a consultant working for Gulf in this bid, in a previous bid situation when it was working with Morgan Grenfell, the merchant bank acting for Gulf in this bid.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments