FSA threatens Heritage Oil merger deal
HRTIF | Quote | Chart | News | PowerRating -- Plans by controversial businessman Tony Buckingham to double to size of his oil company Heritage have become embroiled in an investigation by the Financial Services Authority.
The City watchdog is questioning the credentials of certain executives at Turkish group Genel, which Heritage is trying to buy.
Heritage said yesterday it had "recently been made aware of an investigation by the Financial Services Authority (FSA) that could potentially affect the ability of certain members of Genel's operational management team to assume their proposed roles in the combined entity."
Insiders say that Heritage learned of the FSA inquiry only within the past few days.
Heritage, worth just under UKpound 1.5bn after its shares slid almost 3 percent yesterday, announced plans to buy Genel in early June. The takeover would create the leading oil company in the Kurdistan region of Iraq, Heritage said. It would propel the combined firm into the FTSE 100 index.
The deal was due to be tied up by the end of September. Heritage insists the FSA probe should not stop the takeover being completed-But now it may not happen before October -- although Heritage maintains the delay is nothing to do with the FSA's move.
Under the merger proposal, Heritage planned two Genel executives would join the board of the combined group. Heritage refused to comment yesterday on whether they are among those targeted by the FSA. It emphasised that no executives currently at Heritage are under investigation.
The revelation adds to the controversy surrounding Buckingham, who secured a London listing for Heritage shares last year.
In the 1990s, Buckingham was a partner in South Africa-based mercenary firm Executive Outcomes. With Colonel Tim Spicer he was also a leading figure in Sandline International, which provided mercenaries and arms.
One of his partners in Executive Outcomes was Simon Mann, who was jailed in Equatorial Guinea for his part in a failed coup attempt.
News of the FSA's intervention came as Heritage announced firsthalf results. The company's production is negligible as it is concentrating on exploration. Losses were $12.8m (UKpound 7.8m), a fall of 22pc.
In the first half of the year, Heritage made discoveries in Kurdistan and Uganda and it placed new shares that raised UKpound 132m.
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