Investors in dispute with oil explorer Petrel Resources over the sale of some of its shares have written to the company saying that they never approved the sale of the stock.
Petrel recently got the High Court to bar three individuals, United Arab Emirates-based Roger Edward Tamraz, and Michel Fayad and Said Mehraik, who live in France, from unlawfully selling shares in the Irish company.
The trio held 100 million Petrel shares directly and through a company, and had agreed not to sell them before next August under the terms of an investment deal concluded in November. Petrel maintains that it found in January that they had sold shares in breach of this agreement.
The shareholders, known as the Tamraz group, have written to Petrel to say that they never approved the sale of the shares.
Their letter states that they had pledged 37.33 million shares as security for a £3.15 million (€4.1 million) loan from a US-registered company called EYCP.
The document, dated February 6th, which Petrel published on Monday, states that the Tamraz group understood that the pledged shares would be held in custody as security for the loan and would not be at risk until the cash was advanced under the loan agreement’s terms. Thus the group transferred the shares to a nominated account.
The letter claims that “in breach of of its obligations” under the loan agreement, the lender failed to advance the cash as promised.
On January 3rd, EYCP served notice on the Tamraz group claiming that they had breached the loan agreement and asserting that it owned the shares as a result.
“The shareholders understand that the lender has since this date disposed of some of the pledged shares,” their letter says.
“At no point in time did the shareholders instruct the lender to dispose of the pledged shares on the shareholders’ behalf.”
Their letter also explains that while the shares were delivered to a custodian, Deutsche Bank Switzerland, EYCP never confirmed that they were “tradable” under the terms of the loan agreement.
“Therefore, in the shareholders’ view, the pledged shares never became collateral as they were not delivered and the lender had no right to sell any of the pledged shares they sold,” the letter states.
Mr Tamraz, Mr Fayad and Mr Mehraik maintain that as they understood the shares would not be at risk until EYCP loaned them the money, they originally did not believe they had to formally notify Petrel of the transaction.
The three investors maintain that they are still the beneficial owners of the shares that they pledged as security for the loan and that they are now in dispute with the lender.