Eurasia Drilling minority shareholders suing over buyback price in Cayman court
MOSCOW. Feb 9 (Interfax) - A group of minority shareholders of Eurasia Drilling Company (EDC) led by United Capital Partners (UCP), is suing Russia's largest oilfield services company in the Cayman Islands over the price of a share buyback in which EDC management bought up the whole free float at the end of 2015, the Kommersant newspaper said, quoting sources with knowledge of the situation.
Losing the lawsuit, which was filed on February 3, could cost EDC up to $335 million, but analysts believe it will be hard to prove under-pricing in the current difficult situation in the industry, the paper said.
The shareholders of Eurasia Drilling on November 13 approved a plan to merge the company with EDC Acquisition Company Limited (EACL), a firm created by the main shareholders of Eurasia Drilling. EDC delisted from the London Stock Exchange as a result, and became a privately owned company. The decision was reached by the major shareholders after the sale of the company to Schlumberger collapsed.
The core shareholders originally offered the minority shareholders $10 per Global Depositary Receipt but then raised this to at $11.75.
The holders of 76.1% of issued shares or 89.3% of shareholders approved the deal to go private. The Free float was 30%. Given that all core shareholders and EDC executives voted and all of them approved the deal, only around 18% of the minority shareholders will have approved it, analysts at Sberbank CIB have estimated.
UCP, which owns 1.825% of EDC, has said in the past that is disagrees with the buyback price of $11.75 per GDR and would defend its interests in keeping with corporate procedures and Cayman Island laws.
EDC later said its management had reached agreement with a number of minority shareholders holding a total of 1.6% of the company to buy their GDRs for $11.75 each.
