Madagascar Oil suspended after bid to seize its assets
Shares in Madagascar Oil were suspended less than three weeks after it came to market, as the Malagasy government - led by a former nightclub DJ - moved to grab its exploration licences.
The oil explorer, which has only been trading on junior stock market AIM since 29 November, said the Malagasy (Madagascan) state had declared its intention to buy the majority of the firm's assets in the country.
The company - which had a market value of £142m before its shares were suspended - warned that the state might not pay a full price for the oil prospects.
'There can be no guarantee that any price agreed for such an acquisition will be representative of the fair value of such assets,' the company said.
Madagascar Oil vowed to fight any attempt to snatch its assets on the cheap.
'The company has obtained legal advice that all of its licences are valid and that the obligations on both parties are legally binding,' it said. 'Madagascar Oil intends to robustly defend its position.'
The government in Malagasy's capital of Antananarivo wants to buy four exploration blocks in the west of the island, where oilfields are thought to contain reserves of more than 1bn barrels.
But the former French colony has not expressed any intent to buy Bemolanga, an exploration prospect 60pc owned by French oil giant Total.
The Malagasy government is headed by President Andry Rajoelina, a 36-year-old former DJ on the Antanarivo club scene, who survived a coup attempt in November.
Rajoelina - a former mayor of Antananarivo who owns radio and TV stations in the country - came to power in a bloodless coup that ended in early 2009.
Sources close to Madagascar Oil pointed out that Rajoelina's actions could deter future investment in the African island, the 214th poorest country in the world. But the company has little choice other than to enter into negotiations with the government, because there is no international court of arbitration to resolve such asset seizures.
Madagascar Oil came to market in late November with the promise of exploiting Madagascar's tar sands, a controversial source of oil because it is requires so much energy to extract.
The firm's share suspension is an embarrassment for the brokers which brought it to market: Strand Hanson, GMP Securities and Mirabaud Securities.
Mirabaud attracted controversy earlier this year when Regal Petroleum sacked it as an adviser, claiming it had backed an attempt by controversial former chairman Frank Timis to oust David Greer, then chief executive.
MADAGASCAN FACTS
Exports: Coffee, vanilla, shellfish, sugar
GDP: Ranked 214th in the world
Population: 21.3m
Independence: Gained from France in 1960
Currency: £1 = 3191 Malagasy Ariary
President: Andry Rajoelina
Source: CIA Factbook
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