An energy company that is funded by Kohlberg Kravis Roberts (KKR), a US-based investor and buyout firm, has launched an aggressive takeover of a UK-based fracking group. Depending on how the scenario unfolds, it could have a positive or negative impact on oil and gas contractors in the UK.
Trans European Oil & Gas (TEOG) is trying to force IGas Energy to sell its fracking company, which has assets in Weald Basin in the South of England, and in the East Midlands. IGas Energy does business under brand names including Star Energy and Dart Energy. IGas has several licences to frack shale gas in the Midlands and Lancashire.
TEOG has managed to acquire a lot of shares in IGas through the purchase of secured bonds. The number of shares is not known, but the volume is big enough to give TEOG voting rights. As a result, it has been trying to force IGas to sell its conventional assets.
It is believed that TEOG is taking a “loan-to-own” approach. As a result, it will purchase IGas’s debt, giving it control over the company. Using this approach, it can also gain control over the assets of IGas by ensuring that the balance sheet gets restructured.
Reports suggest that TEOG has brought Evercore on board. Evercore is an investment bank and will help TEOG acquire assets owned by IGas. The British fracking company has already informed the London Stock Exchange that there is a difference of opinion among the company’s bondholders. It clarified that some of the bondholders favour either the restructuring of capital or selling off conventional assets.
IGas has stated that it will hold discussions with its major bondholders to ensure a consensus while it continues holding discussions with other investors. However, some experts believe that TEOG will succeed in gaining control over the assets in which it is interested.