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London: Circle Oil Plc's CEO said talks with a Libyan-backed investment fund over a strategic 29.7 per cent stake in the AIM-listed British oil and gas exploration group were hammered out over "a couple of months", but are not likely to lead to a full-scale takeover.
Libya Oil Holdings, which is wholly owned by the Libyan Investment Authority, is paying £19 million ($33.42 million) for its stake in Circle Oil as part of a 33 million share placing by the company.
The placing will also bring in Icelandic investors Kaupthing Bank, who are taking a 15.6 per cent shareholding at a cost of £10 million.
"Talks with the LIA started a couple of months ago after we were introduced to them by a Circle Oil shareholder," Chief Executive David Hough told Reuters in a telephone interview yesterday.
"We did a couple of presentations and they were very impressed by our range of technical skills and said they wanted to invest. They indicated they wanted to take as much as they could without triggering UK Take-over Panel rules, but they stressed they had no intention of making a takeover bid for the company," he added.
Share placing
Under UK rules, a bid is usually triggered if a company has a stake of 30 per cent, although in certain circumstances the requirement for a full bid can be waived.
The share placing will see Circle Oil issue 173.7 million new shares at 19 pence each.
The shares were trading a penny easier, or 3.42 per cent lower, at 28.25 pence at 0855 GMT.
"When talks began the shares were under 19 pence," said Hough.
"But they have crept up in recent weeks and following the news of our 60 per cent investment in the Rharb Basin in Morocoo they have recently been trading at around 20-23 pence," he continued.
Circle Oil plans to use the £33 million of new money to fund its exploration programme in Morocco, Tunisia and Egypt.
The group plans to drill up to 15 wells between now and the end of 2009.
"This is a huge programme of work we are undertaking and the fresh funding will enable us to do it. We're very excited about what the future will bring," said Hough.
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