UK RockRose Cranks up Pressure on IOG

UK RockRose has made a formal approach to the administrators of London Oil & Gas to buy the debt plus interest of southern basin-focused Independent Oil & Gas for £40mn ($53mn), it said March 25. The funds are now with its solicitors as proof ot its readiness to do a deal, RockRose said. LCF is backing LOG, a substantial lender to IOG, and both are in administration.

Raising the pressure, RockRose also said that IOG's lack of co-operation had been obstructive and it has therefore sent a copy of its March 25 London stock-exchange announcement, with details of its bid, to a wide range of regulatory and parliamentary bodies – the Treasury Select Committee, the Financial Conduct Authority, the Serious Fraud Office and the Alternative Investment Market – as well as creditors of  LCF mini-bond holders and the LCF Action Group.

RockRose warned that if IOG's debt were converted into equity in the event of a default on a repayment, LCF and LOG creditors would have to wait longer before recovering any money. IOG does not have production yet, nor has it announced alternative funding for its plans to develop North Sea gas hubs. IOG had drawn down £34.62mn of its facility and RockRose is adding just over £5mn for interest.

RockRose said it had been denied copies of the IOG debt facility agreements and associated convertible instruments, but said that it did not need to do due diligence as a condition for the bid. The bid "is accordingly without substantive conditions." 

The administrators have said that the IOG debt is one of the few realisable assets in the administration of London Capial Finance (LCF), and that IOG's refusal to grant it access was "a serious impediment to RockRose in assessing its offer for the IOG debt," RockRose said, adding that the "repeated failure of the administrators to substantively engage with RockRose has meant that there has been no opportunity for a constructive negotiation to date." 

RockRose said it was clear that, from the limited information that is in the public domain, the IOG debt facilities and associated convertibles could account for more than 50% of the fully diluted equity share capital of IOG were the conversion rights to be exercised in full.