Shell admits rump of stock could trade with new shares

Daily Telegraph: Shell admits rump of stock could trade with new shares

By Christopher Hope, Business Correspondent (Filed: 04/06/2005)

Shell has admitted that a rump of shares in Royal Dutch Petroleum could still be traded alongside new Royal Dutch Shell stock if not enough investors accept the energy giant’s restructuring plans.

Shell has pledged to reform its 100-year-old dual Anglo-Dutch structure in the wake of its shock admission that it had overstated its proven oil and gas reserves by 25pc.

The oil major is 60-40 controlled by Royal Dutch Petroleum in the Netherlands and Shell Transport and Trading in the UK. Under the plans, they will be replaced by Royal Dutch Shell, with its main listing in London.

Shell officials are confident of achieving the acceptances from Shell Transport holders – 75pc of the shares by value and 50pc of the shares voted at an extraordinary meeting. One senior company source said there was a “very high likelihood” of agreement. At Royal Dutch, 95pc of the issued shares must approve the deal. Asked whether Shell would get these acceptances, the source was less sure: “We are confident of getting to an acceptable number. There is every chance of getting to the 95pc.”

If the 95pc figure is not achieved, then the new board of Royal Dutch Shell can decide to push on regardless. The source added: “If you get 94.2pc acceptances it is a no-brainer. If you get only 4pc acceptances it is a no-brainer. It is somewhere in between where it becomes more difficult.”

Shell’s problems are compounded because its total shareholder base is split 40-30-30 between the UK, Europe and the US. Most of the shares traded in the US are Royal Dutch stock. Royal Dutch shares are traded on another eight exchanges.

Royal Dutch shareholders must accept by July 18, two days before trading in Royal Dutch Shell shares begins. Shell will not disclose how many Royal Dutch shares are held by institutions and private investors, who might be less likely to reply.

Shell has warned that Royal Dutch investors who fail to accept might find it difficult to trade their shares because of an illiquid market. It has said it might pursue a “Dutch squeeze-out procedure” involving shareholders being forced under Dutch law to hand over their stock in return for cash.

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