Lasmo cites Warburg to boost its case: Enterprise 'arguing one thing while its adviser says another'

LASMO yesterday tried to undermine Enterprise Oil's pounds 1.4bn takeover bid by using the predator's own adviser, S G Warburg, to bolster its defence.

The move came as Graham Hearne, Enterprise's chairman and chief executive, sent a circular to shareholders attacking Lasmo's financial record.

Mr Hearne was responding to last week's Lasmo defence document and focused on claims that the target company's gearing was set to balloon from about 31 per cent to 80-90 per cent.

But Rudolph Agnew, Lasmo's chairman, pointed out that only last month SG Warburg was saying gearing would peak at 50 per cent. 'It is interesting that Enterprise is arguing one thing while its adviser is saying another,' he remarked.

Lasmo's gearing was reduced from 75 per cent following last month's rights issue. While Mr Agnew admits gearing will rise as the company finances its pounds 800m investment plans, he said yesterday it would remain at a prudent level.

This is being seen as an indication that gearing will not rise beyond 50-60 per cent.

Enterprise accused Lasmo of selective use of the Warburg circular, which was cautious about Lasmo's future. But it indicates that, just 14 days into what will be a 60-day bid battle, both companies will take every opportunity to discredit each other's case.

In yesterday's document from Enterprise, Lasmo was accused of making misleading claims in its defence circular last week.

'For example,' said Mr Hearne, 'Lasmo contributed only 20 per cent of the enlarged group's pro forma 1993 operating profits but its shareholders will receive 40 per cent of the equity - a substantial premium.'

He also rejected Lasmo claims that Enterprise needed the target's earnings to meet dividend expectations, quoting brokers' forecasts showing Lasmo would continue to make losses in 1994-95.

And Mr Hearne questioned Lasmo's claim to have strengthened its management team, saying that only one new director - Dick Smernoff - had been appointed out of five in total.

Mr Agnew replied: 'This document is based on old information and selective . . . The document is most interesting for what it omits. It makes no reference to Lasmo's outstanding assets, its exploration potential and its burgeoning developments.

'These are Lasmo's independent future. Mr Hearne chooses only to look back, perhaps because he does not like what he sees ahead for Enterprise.'