THE TELECOMS entrepreneur Denis O’Brien is set to add to his already substantial holding in Sterling Energy, the UK-based oil and gas exploration and production company, as part of a bailout plan that will see the addition of a new strategic investor.

Sterling recently rebuffed a takeover offer, reputed to have been made by Argentine oil tycoon Carlos Bulgheroni, and is instead planning to raise £60.8 million by placing 4.8 billion new shares. The money will be used to shore up its balance sheet by repaying debt and for working capital purposes.

O’Brien is thought to have been a key dissenter to the takeover offer for Sterling, believing it to undervalue the company.

Sterling’s placing document has classified Invesco and O’Brien as related parties for the purpose of stock market rules. According to Sterling’s documents, Invesco has agreed to buy 1.15 billion shares in the placing, with O’Brien acquiring 190 million.

This represents 23.9 per cent and 4 per cent respectively of the total shares being placed. Post the share issue, O’Brien/Invesco will own 18.8 per cent of Sterling.

The new shares have been issued at a steep discount of 52 per cent on Sterling’s share price at the time of the placing announcement last week.

As part of the placing, Sterling will get a new strategic investor – a fund called Waterford, which has agreed to take a 29.99 per cent stake in the company. Waterford is led by Russian financier Michael Kroupeev.

Waterford has agreed not to increase its shareholding before the end of this year.

O’Brien is under water on his investment in Sterling to date. He has spent almost two years building his stake, paying up to 14 pence a share for stock. Sterling’s share price has been on a steady downward trajectory since then.

Sterling’s shareholders will have the opportunity to vote on the placing at an egm on September 7th, but it’s a done deal at this stage.

It just remains to be seen who ultimately gains control of the business – Waterford or O’Brien.