Verenez Energy sale to Chinese firm stalls

2009-06-22 23:56:03 -

CALGARY, Alberta (AP) - Libya's National Oil Company is accusing Canada's Verenex Energy Inc. of improperly bidding for exploration rights in the North African country four years ago. The news further complicates the company's planned sale to a Chinese firm.
Verenex said Monday that Libya's NOC sent two letters accusing Verenex of being improperly pre-qualified to bid for the Area 47 oil property acquired in 2005.
Verenex and China National Petroleum Corp. have been waiting since February for the Libyan government to allow their $499-million Canadian (US$432 million), or $10-per-share Canadian (US$8.60), takeover deal to go ahead.
The company cautioned investors the sale to CNPC may not go ahead as proposed and could even be canceled outright.
Verenex shares fell nearly 20 percent on the Toronto stock exchange.
«It seems very coincidental, the timing of this ongoing investigation,» said Verenex chief financial officer Ken Hillier in an interview.
NOC officials have said publicly the government would exercise a pre-emptive right to buy Verenex by matching CNPC's price, but no formal overtures have been made.
Verenex negotiated its deal with CNPC with the expectation of paying a $46.7-million Canadian (US$40.45 million) approval bonus to the Libyan government.
It now appears Libya's General People's Committee wants either a higher approval bonus, or a lower purchase price in the event it does pre-empt the sale to CNPC, Hillier said.
«We have responded by saying 'Tell us what you're looking for,»' he said.
«Until we get that, I don't like to use the word 'negotiation,' because we'd be negotiating with ourselves if we were the ones to put the next price on the table.
The Canadian government has also been involved.
«The Government of Canada is continuing to follow this matter closely, and will continue to press Libyan authorities for a response,» Melisa Leclerc, a spokeswoman for International Trade Minister Stockwell Day, said in an emailed statement.
«Canada has made repeated representations to Libyan authorities in Tripoli and Ottawa, indicating our expectation that this matter will be resolved in a manner that is fair to Verenex and its shareholders.
Leclerc added that Day has sent a letter to his Libyan counterpart on the issue and is waiting for a response.
Calls to Libya's National Oil Company in Tripoli were not answered Monday evening.