Sovereign Oilfield Group trading again after sell offs

Published on Monday 11 May 2009 21:43

AN ABERDEEN oil services company which had its shares suspended from the stock exchange seven months ago, will finally resume trading this week after selling two of its businesses to cut its debt.

Sovereign Oilfield Group, which is listed on London's Aim, failed to publish its annual report within six months of its financial year end due to funding uncertainties.

Yesterday it announced the sale of two of its businesses, Vetec and Labtech, for 5.45 million, with the cash used to pay down its debt.

The sale of the oil rig design and engineering businesses was a condition imposed on the group by its lenders, including HBoS and Merrill Lynch, for continuing to support the firm.

Because the sale price of the businesses is more than Sovereign's market capitalisation prior to its shares being suspended, it is defined under stock exchange rules as a "fundamental change of business". It therefore requires the approval of shareholders.

Sovereign will retain its drilling and fabrication businesses, which delivered 87m in revenue in the year to 31 March, 2008, following the sale.

In a statement yesterday, the group said the disposals would enable it to publish its annual report for the year to 31 March, 2008, and its results for the six months to 3 October. Shares are due to resume trading on Friday.

A month before trading was suspended last year, Sovereign announced Sheikh Sabah Ali Fahad al-Salem al-Sabah, a 25-year-old member of the Kuwaiti royal family, was joining the company as a non-executive director.