View from City Road: Kingmaker should crown Enterprise

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Along time ago this column used the analogy of an amateur tennis match to describe the battle (if it can be called that) between Enterprise and Lasmo, the oil independents. Graham Hearne, chairman of Enterprise hates it for he was meant to have been the number one seed, easily capable of seeing off a burnt-out old has-been like Lasmo in straight sets.

Instead of which, the game has gone the full course and still there's no sign of a winner. With nearly two months of play under their belts, the tournament has barely progressed. It's hard to know which is the greater surprise, Enterprise's lack of form or Lasmo's ability to capitalise on it. As we approach Friday's climax - if it can be called that - the score seems to be about deuce.

To say the result is too close to call credits it with a greater excitement value than it deserves, for this has been a match remarkable only for the abysmally poor level at which it has been played. With decision time approaching judgements, are nonetheless easier to make. Lasmo has certainly had the better of the propaganda war but that hardly surprises: Rudoph Agnew, a skilled practitioner in these things, and his chief spin doctor, Alan Parker of Brunswick, make a charming and powerfully persuasive pair.

Lasmo's defence runs something like this: sure, we were a diabolically bad company, but things have changed. We've had a refinancing. The chairman, chief executive and finance director have been booted out and replaced with more able people. Shareholders have had all the pain. Why now give away what even Enterprise acknowledges are first-class assets for a second-class offer? What does Enterprise bring to the party?

What indeed? Cut through the smoke and noise and you find a fair amount, although the company seems quite incapable of getting the message across. The dividend carried by the new Enterprise shares is lower than the ordinary, but it is still two and a half times higher than Lasmo shareholders will get if the company stays independent. Backing Enterprise is a two-way bet on the oil price: up or down, the investor is better off than with Lasmo alone.

If shareholders reject this offer, they forgo a simple premium. A proven management is given the cold shoulder in favour of an entirely unknown one. It is a brave shareholder who ignores the lessons of the past and sticks with a company which has traditionally been such a disaster.

Enterprise was last night making its final presentation to Phillips & Drew Fund Management which, with more than 16 per cent of the stock, is in a position to determine the outcome. Tony Dye, PDFM's investment director, must relish his position as kingmaker and it would be foolish to predict his decision. What he should decide is another matter. He should back Enterprise.