Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: Big Dog who wrote (10160)	5/29/2002 8:02:48 AM
From: HH	Read Replies (1) \| Respond to of 206085

Veritas financing new key to PGS by Scott Stuart /The Deal.com May-28-2002 Sinochem's drop-dead date for its acquisition of Petroleum Geo-Services ASA's Atlantis subsidiary came and went again without incident. So a sale of Atlantis increasingly seems irrelevant to the completion of PGS' $640 million acquisition by Veritas DGC Inc. But the PGS-Veritas deal is still in doubt, risk arbitrageurs said, and the spread reflected that, ending at $1.91, or 45%, Tuesday. The question is no longer whether PGS can pull off a sale of Atlantis but whether Veritas can arrange financing to preserve its investment-grade status without the proceeds from an Atlantis sale. Veritas has confirmed that the Atlantis sale to China National Chemical Import & Export Corp. (Sinochem), is hung up over politics in the United Arab Emirates, said Scott Keller at DealAnalytics.com. Key UAE figures are reluctant to see the gas-production assets sold to a company controlled by the Chinese government. Representatives of Sinochem and the UAE are meeting starting this week, Keller said. But if a deal gets done at all it is unlikely to be soon, he said. Veritas is thought to have queried Royal Dutch/Shell Group about the value of Atlantis, an arb said. Shell says the UAE is a "pretty friendly place to do a deal," the arb said. "Someone may be driving a hard bargain regarding royalty payments," he said. Veritas has said it would file a new definitive agreement for the PGS merger this week. But that seems unlikely, given that the agreement may no longer be conditioned on the sale of Atlantis. Veritas now has to confirm that Atlantis is worth $200 million and arrange for $600 million in equity financing to deleverage PGS. Veritas is in discussions with several investment banks regarding convertible or equity financing. Even if Veritas can arrange the convert, an arb said, it will be expensive because it significantly dilutes the earnings accretion of the PGS deal. "Veritas is increasing its liabilities while retaining an asset of somewhat questionable value," he said. "That is not an easy sell to shareholders," he said. Atlantis aside, the deal could still fall apart for a variety of reasons, the arb continued. Despite Veritas' continued commitment to the merger, it could again seek a lower exchange ratio or have trouble getting the equity financing, he said. Veritas could also determine that even if Atlantis is worth $200 million, it couldn't realize that much in a sale. "The deal is like herding cats into a barn," the arb said. "When you think you've got them all in one gets away."