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Financial Times: Regal to raise £80m in placing: Mr Greer said: ‘The company doesn’t Google well.’

By Maggie Urry
Published: January 24 2008 13:39 | Last updated: January 24 2008 13:39

Regal Petroleum’s colourful stock market career took a further twist on Thursday when it said it would raise £80m from a placing to develop its Ukrainian gas reserves.

The oil and gas company also revealed that it had been the subject of investigations by the Financial Services Authority and the London Stock Exchange over the failure of its Greek oil exploration, which in 2005 led to a sharp fall in the share price and the ousting of the group’s founder Frank Timis who was chairman and chief executive.

David Greer, who was appointed chairman and chief executive last November, said he had been working hard to “move away from [Regal’s] somewhat chequered past” and deliver value for shareholders. He said he was unable to comment on the regulatory issues because of confidentiality agreements.

Mr Greer said: “The company doesn’t Google well.” But he had decided not to change its name. “To change the name now would be like putting lipstick on a gorilla,” he said.

The company said the investigations had closed as the LSE intended to refer the “alleged breaches” of two AIM rules between June 2003 and June 2005 to its AIM disciplinary committee. A conclusion would take at least six months.

Further, the group said, it had come to an agreement with Mr Timis, that allowed the company carry on its business “independently of Mr Timis and his associates”. Mr Timis still holds 19.95 per cent of shares. However, his stake will be diluted by the placing, which represents 39.5 per cent of the existing share capital.

Mr Greer, a former Royal Dutch Shell executive, joined Regal the day after the group called off a deal between the two companies. Shell was poised to take a stake in, and fund the development of, Regal’s two gas fields in Ukraine.

The company believes that the Ukrainian gas assets can take advantage of rising gas prices in the area where there is an energy shortage. Mr Greer said: “We believe we could deliver more shareholder value by doing it ourselves.”

The proceeds of the placing would fund heavy investment during the next two years and at the end of that period the business would turn cashflow positive and be able to fund itself.

Mr Greer said he had given a commitment to investors not to issue equity unless an attractive acquisition opportunity arose.

As well as funding the exploitation of the Ukrainian assets, the placing would provide working capital. At the end of December the group had $5.6m in cash and had drawn on $9m of a credit facility.

The placing is conditional on shareholder approval at a general meeting. The group said it had been oversubscribed by institutional investors and the price was set at 150p, a small premium to Wednesday’s closing share price of 147½p. The shares rose to 152p on the news.

In an effort to distance Regal from its past, Mr Greer has brought in new management and hired new advisers. Strand Partners replaced Evolution Securities as its nominated adviser.

The group listed on AIM in 2002 when it raised equity at 60p a share. In April 2005 it placed shares at 390p a share, but the following month announced that its Kallirachi 2 well in the Aegean Sea had not found commercial quantities of oil. The shares fell 60 per cent in one day, and Mr Timis left the board in June.

He appeared to regain control of the group in 2006 when his associate Paul Morgan was installed as chairman and chief executive. However, Mr Morgan resigned after four months citing “personal reasons”.

Copyright The Financial Times Limited 2008 and its sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

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