PETROCELTIC International, which is chaired by oil industry entrepreneur Robert Adair, has strongly refuted claims that a proposed £60 million placing is not in shareholders' interests as its battle with a major investor heats up.
The oil and gas exploration company, formed by the merger of Edinburgh-based Melrose Resources and Irish business Petroceltic, wants to raise around £30 million of the total sum from Dovenby Capital, which is run by Malaysian businessman Dato Fuad.
Earlier this week Swiss hedge fund Worldview Capital Management, which has around 36.7 million Petroceltic shares giving it a stake of close to 20 per cent, called on investors to block the plans. It is understood Worldview's stance now has the support of some smaller investors but 25 per cent of shareholders would need to vote against it in order to stop the proposal going through at an extraordinary general meeting next month.
Petroceltic re-iterated yesterday that if the share placing is not passed it could have a "material adverse effect" on the business.
Worldview is upset as Petroceltic wants shareholders to give up their pre-emption rights in respect of the shares it wants to sell to Dovenby.
That means existing shareholders would see the percentage they own in Petroceltic being reduced.
Worldview had also offered to underwrite the entire offer and respect the pre-emption rights.
However yesterday Petroceltic hit back at Worldview saying the fund's proposal was three per cent more expensive and only made the day before the placing with Dovenby was announced. It said the proposal was "not fully termed and therefore lacked certainty" and suggested Worldview could have ended up with a stake of more than 25 per cent.
The company said: "Petroceltic strongly believes that the placing is in the best interests of all shareholders and is a preferable alternative to its shareholders to that proposed by Worldview.
"Petroceltic has always and will continue to uphold the interests of all its shareholders and the board believes that these interests are best served by, inter alia, ensuring a diverse and balanced shareholder base, bringing new and valuable experience into the company and maintaining high corporate governance standards."
Worldview did not make any further comments yesterday but is expected to continue lobbying other shareholders to back its stance.
If the resolution is passed at the EGM in Dublin on June 9 it would give Dovenby around a nine per cent stake and see it appoint someone to the Petroceltic board.
According to Petroceltic Mr Fuad is an experienced Malaysian oil and gas industry specialist who was deputy chairman of Bumi Armada Berhad, which owns and operates floating production, storage and offloading units as well as offshore support vessels.
Separately, Petroceltic announced disappointing well results on a number of prospects.
In the Kurdistan region of Iraq the final two drill stem tests on the Shakrok licence, where it has 16 per cent, did not see hydrocarbons flowing to the surface.
It said drilling preparations for the Dinartae licence, where Petroceltic also has 16 per cent, were at an advanced stage with the well expected to take around 150 days to reach its planned depth.
In Romania a well on the Muridavia licence, where Petroceltic has 40 per cent and is the operator, is being plugged and abandoned after failling to find commercial quantities of hydrocarbons.
Then in Egypt the South Dikirnis-1 well, which Petroceltic has 100 per cent of, found high quality sandstone reservoirs but further analysis suggests it is filled with water rather than oil.
Meanwhile Petroceltic's annual report, published yesterday, shows Mr Adair saw a large reduction in his fees.
Mr Adair, who holds 41.1 million shares according to the annual report, received $187,296 for being chairman in 2013.
That was down from the $482,207 he received in the prior year when the takeover of Melrose by Petroceltic completed in the October.
For 2013 chief executive Brian O'Cathain got total remuneration of $871,397, down from $1.1m.
Shares in Petroceltic ended the day down 6.5p, or four per cent, at 154p.