Korean firm close to securing £1.7bn for Dana Petroleum bid

Published on Friday 30 July 2010 15:42

KOREA National Oil Corporation (KNOC) is on the verge of securing the loans it needs to formalise its £1.7 billion bid for Dana Petroleum and could deliver the paperwork to the Aberdeen-based oil and gas explorer as early as this morning.

UK takeover laws require KNOC to have its acquisition loan in place before it can make a firm offer.

The loan is understood to be guided through the process by KNOC's own finance team, using cash from mostly Asian banks.

The Korean suitor last week upped its takeover proposal from 1,700p to 1,800p, which oil industry analyst Peter Hitchens of Panmure Gordon described as a "knockout" offer.

But Dana said that KNOC had failed to answer questions on how it would fund the potential deal and that repeated offers to meet with the South Koreans had been refused.

Schroders, Dana's largest shareholder with a 13 per cent stake, last week put pressure on the oil company to open its books to the Koreans.

Richard Buxton, Schroders' head of UK equities, said the offer was a "fair price" and urged Dana's directors to "engage at this level".

Tony Cross, Dana's chief executive, visited most of the company's ten largest shareholders this week to discuss the approach, along with senior non-executive director Philip Dayer.

The Scots firm yesterday announced it had discovered an oilfield in Egypt, after its Fin-1X well encountered "good quality" oil-bearing sands.

Analysts at Evolution Securities suggested the discovery would add around 5p per share to Dana's market value.

The group, which owns and operates Fin-1X, said the well - along with the Lorcan oilfield discovered in the region last month - were estimated to have initial reserves of between ten million and 12 million barrels of oil and offered "considerable potential". Shares in Dana closed up 1p at 1,711p.