Oil trader Vitol drops plans to buy Sterling Resources

Mon May 13, 2013 1:06pm EDT

* Purchase would have given it access to North Sea gas

* Sterling said Vitol's C$192 mln offer was too low

* Sterling shareholders propose new Chairman

By Emma Farge

GENEVA, May 13 (Reuters) - Swiss trading house Vitol has dropped plans to bid for Canada-listed oil and gas producer Sterling Resources, Sterling said on Monday, after talks stalled over price.

Vitol, which is also a Sterling shareholder, said in February it would offer C$192 million ($190 million) for Sterling, giving it a foothold in the North Sea oil and gas sector.

Many large commodity trading houses have sought to secure physical assets such as oilfields or aluminium smelters as part of a bid to extend their control over supply chains.

"Vitol never made a final bid. The fact that they did not leaves it in abeyance," Sterling Chief Executive Mike Azancot told Reuters via telephone on Monday.

Vitol declined to comment on the reasons for abandoning its takeover plans. Last month, Vitol said that it had not proceeded with an offer because Sterling had not provided an independent valuation of the company.

Sterling said in April that the Vitol offer did not represent fair value for the company.

As part of a strategic review which Azancot said was prompted by the Vitol offer, a group of Sterling shareholders have proposed replacing its Chairman Walt DeBoni with a former Centrica executive Jacob Ulrich.

A decision will be made on June 11.

Sterling's share price has fallen by more than 50 percent since this time last year. At the end of 2012, Sterling had a total financial debt of 87.9 million pounds ($135 million).

Sterling, which has sought to raise funds to develop its long-delayed Breagh gas field in the North Sea, on April 17 issued a $225 million secured bond.

Azancot said that the company expected its first gas production in August.

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