Sterling Faces Unsolicited Bid from Vitol

European focused explorer Sterling Resources is facing an unsolicited bid from oil trader Vitol.

Vitol Anker International B.V. has announced that it intends to make an unsolicited cash offer for all of the outstanding common shares for the Canadian listed oil and gas exploration company.

The offer represents a 79% premium o Sterling’s closing price on February 12, 2013 inclusive of Sterling’s debt, and places an enterprise value of C$290.6m.

Vitol, which recently provided Sterling with US$12m loan as well as purchasing common shares, holds about 14 per cent of Sterling. In addition, its bid has received the support of Canadian hedge fund Sprott Asset Management that holds 9.9 per cent of Sterling shares.

In a press release, Vitol said that it has held discussions with Sterling’s Board of Directors with a view to secure a board-supported transaction but that the discussions have, to date, not led to an agreement. Vitol said that it decided to act “ based on the Company’s (Sterling’s) inability to find an acceptable long-term financing solution.

Sterling has been considering various equity and mezzanine financings to raise approximately CAD 50 million or more to cover expenditure requirements in the first half of 2013 and into the third quarter. Recently, it had announced plans for a high-yield bond issuance in the second quarter.

Sterling, which has operations in North Sea, the Netherlands and Romania, confirmed that has been in ongoing discussions with Vitol regarding a potential transaction that it believed could be in the best interests of Sterling shareholders and that would also provide additional interim funding.

Sterling said that it has also had discussions with third parties on other potential transactions including business combinations, sales of subsidiaries and assets and additional financing opportunities and will continue to review available alternatives, including negotiating a mutually acceptable arrangement with Vitol.