ADVISERS working on Aberdeen-based Parkmead Group's planned £15 million takeover of Lochard Energy are set to share fees totalling around £1.2m plus VAT.
The circular detailing the terms of Parkmead's all-paper bid shows brokers and lawyers working on the transaction are in line for big payouts.
The proposed deal is the biggest move made by Tom Cross in his attempt to develop another big North Sea business at Parkmead. He made around £57m when the Dana Petroleum business he built was bought by Korea National Oil Corporation for £1.9bn in 2010.
The biggest earners among advisers on the latest deal are likely to be CIBC and finnCap, who will earn £545,000 in total. CIBC is financial adviser to Lochard Energy, while finnCap is nominated adviser in compliance with Aim requirements and is corporate broker.
Charles Stanley, financial adviser, nominated adviser and corporate broker to Aim-listed Parkmead, is in line for £235,000. Fees for the firms include a variable element, dependent upon the completion of the acquisition.
The circular says Lochard will pay £185,000 legal fees and Parkmead will pay £98,000 legal fees.
Parkmead is paying £20,000 for tax advice while Lochard is shelling out £25,500 for accountancy advice.
Others expenses total £34,000 for Parkmead and £38,300 for Lochard Energy.
While the fees are not of the order of the multi-million pound packages earned by bulge bracket investment banks, they may attract notice. The fees represents around 8% of the value of the deal. As the deal is structured as an all-share takeover, the returns Lochard Energy investors make will depend on the performance of Parkmead Group.
A consortium of rebel Lochard shareholders represented by Cornhill Capital has said it intends to reject the offer. Cornhill has claimed the offer of 0.385 Parkmead Group shares for every one in Lochard "materially undervalues" the target. The rebel shareholders control 25.19% of the shares in Lochard.
Parkmead Group has held irrevocable undertakings and a letter of intent in respect of approximately 41.4% of the issued ordinary share capital of Lochard Energy since May 30.
In the circular sent to Lochard Energy shareholders, directors reiterated their unanimous recommendation of the bid. Lochard put itself up for sale in September. It owns a 10% stake in the producing Athena field 110 miles north east of Aberdeen but lost its status as a North Sea operator in February due to funding issues.
The directors said: "The Lochard Energy directors, who have been so advised by CIBC World Markets plc, continue to consider the terms of the Parkmead offer to be fair and reasonable."
Parkmead shares closed down 0.25p at 13p. Lochard was unchanged at 4.375p.
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