Libyan Investment Authority to buy Verenex in cash deal

Canada-based oil producer Verenex Energy said it had agreed to be sold to the Libyan Investment Authority for about 314.1 mm C$ ($ 293.7 mm) in cash, after a better deal with a Chinese company fell through.
In a memorandum of understanding, the sovereign wealth fund agreed to pay C$ 7.09 per share ($ 6.63 per share) for Verenex's outstanding shares, a steep discount to its original commitment of C$ 10 per share ($ 9.35 per share) in March, when it promised to match an offer by China's CNPC International.

Verenex's deal with CNPC had been troubled for months. In March, Libya's state-run National Oil Corp. said it would exercise its right of first refusal, which allowed it to block CNPC's bid to buy the Canadian oil and gas company. Verenex has operations in Libya's Area-47, a region estimated to hold roughly 2.15 bn barrels in crude oil reserves.
Then in June, National Oil claimed that Verenex had acquired Area 47 through an improper bidding process.

CNPC remained interested after an Aug. 24 deadline for the deal passed without a decision from Libyan authorities, but in early September, Verenex announced that the Chinese company had withdrawn. Libyan parties told Verenex that they wanted a lower price than the CNPC bid, Verenex CEO Jim McFarland said at the time.
The agreement has a significantly lower value than the original per share commitment, which would have brought the deal to a value of about C$ 443 mm ($ 414.3 mm).

Verenex's board of directors said it unanimously determined that this transaction is the best alternative available to the company and its shareholders. The company said it has agreed to try to secure the agreement of its management and major shareholder, Vermilion Resources -- which owns about 45 % of Verenex -- to vote in favour of the deal.
The LIA was established in 2006 by the Libyan government to manage the country's surplus oil revenues.

Foreign investment has been flowing into Libya over the last few years, after the United Nations and United States lifted their sanctions against the North African country. It has been trying to communicate to the world that it is open for business, but Verenex's experience in Libya is an indication of the problems that can still occur.
"They've made it easy to get in, but it seems to be difficult to exit, at least in our case, under normal business terms," Mr McFarland said earlier this month.