Lasmo to sell house stake

LASMO, the beleaguered North Sea oil explorer that launched a pounds 219m rights issue last week, plans to sell about 19 million of its own shares, worth pounds 26m.

The highly unusual shareholding is a legacy Lasmo's ill-fated pounds 1bn takeover of rival Ultramar two-and-a- half years ago.

The shares, 2.6 per cent of its equity, are valued at pounds 22m in Lasmo's books. They were originally owned by Ultramar, but have been inherited by Lasmo. The decision cost the company dear, as the market value of the share bloc has slumped by about pounds 30m since the bid.

Lasmo is in a huddle with its advisers over proposals to offload the stake after its rights issue closes in two months. The expected placing could produce a book profit of pounds 3m for the group if the shares maintain last Friday's share price of 132p.

The shareholding has been disclosed in Lasmo's rights issue document, which states that there is 'no present intention of disposing of any of the shares'.

However Robin Blunden of Schroders, Lasmo's financial adviser, admitted: 'At some stage, the shares will be placed into the market. The company is restricted from selling the shares while the rights issue is going on.'

Although it is a minor stake, the threat to dump it on the market will overshadow the rights issue, and may deter investors from taking up their entitlement.

Lasmo's board does not have any powers to cancel the shares it owns, and will not be seeking to do so in future. Instead, their sale will help to raise additional cash for funding the business, which has been hit by weak oil prices and high operating costs and debts.

The cash call, predicted by the Independent on Sunday last month, is intended to bolster the group's sagging balance sheet.

Lasmo has already raised about pounds 1m by selling its rights as a shareholder to subscribe in its own two-for-seven rights at 105p a share.

The estimated 5 million nil-paid shares were sold last Thursday to its brokers, Cazenove and NatWest Securities, which then placed them at about 18.5p each with institutional investors.

It is understood the two stockbroking firms faced competition from Goldman Sachs and the ubiquitous Swiss Bank Corporation to handle the sale, but offered a keener price. The losers are expected to return to the fray to handle the rump of the rights issue not taken up.