UK IOG Rejects RockRose's 'Derisory' Bid

UK explorer Independent Oil & Gas (IOG) rejected March 25 the £40($53mn) mn bid made earlier that day by independent RockRose to buy all its debt, held by London Oil & Gas, for $40mn in cash. Both LOG and London Capital & Finance are in administration. The earliest of the loans matures in October 2019.

IOG chair Fiona MacAulay said the company was focused on delivering value to its stakeholders through its sanction-ready portfolio of UK southern gas basin fields and it was making progress with shortlisted partners on its farm-out process.

She said IOG continues to believe that its strategy will deliver "significantly better stakeholder returns than RockRose's derisory proposals. It is disappointing to see RockRose trying to take advantage of LCF's mini-bond holders by offering them a significant discount to the opportunistic possible offer to IOG shareholders, which already materially undervalues the company."

IOG said RockRose wanted to buy the loans not only far more cheaply than their fundamental worth, but also at a substantial discount to the see-through value of the already opportunistic possible offer, to the detriment of the creditors of LOG and LCF, while exploiting the unfortunate circumstances of holders of "mini-bonds".

IOG said creditor LOG, itself funded by LCF, had loans with a see-through value of £41.1mn and its 8p and 11.9p warrants have a combined see-through value of £1.4mn. So unless the administrators accept a low-value proposal, the least that RockRose could expect to pay is £42.5mn.

Adding to that the £15.9mn face value of LOG's non-convertible instruments, LOG's loan and warrant interests in IOG amount to £58.4mn. The offer is therefore a 30% discount.

IOG's rejection of RockRose's approach was given with the full support of LOG and the administrators of LCF, it said. Since that rejection, there has been no substantive engagement by RockRose with IOG, with RockRose "seemingly electing instead to focus its efforts on pushing the administrators to accept its derisory offer for LOG's interests in IOG.

RockRose has 28 days to make a firm offer or to drop it formally, under stock-exchange rules. Its original approach to buy IOG's shares was March 5, which gives it until April 2 to do so.