Pittencrieff phones to bypass London: Extra costs kill hopes for listing in UK

PITTENCRIEFF, the Scottish oil and communications group, has scrapped plans to list Pittencrieff Communications Inc, its 54 per cent-owned US mobile phone subsidiary, on the London Stock Exchange as well as New York as part of a proposed demerger of its oil and communications interests.

Details of the demerger proposals, announced yesterday, included news that the demerging oil and gas business, Pittencrieff Resources, has agreed to pay dollars 38m in cash for a 50 per cent working interest in three undeveloped Texan oil and gas fields to be financed by a pounds 25m placing of Resources' shares.

Pittencrieff said it had intended to list PCI shares, which have been traded on the US Nasdaq system since 46 per cent of it was floated last summer, in London as part of the demerger, first foreshadowed in January.

But it now believed that, given the additional costs involved - well into seven figures - and the implications for the timetable of the demerger, it was no longer in the best interest of shareholders to seek a London listing. PCI would continue to be listed only on Nasdaq.

Pittencrieff shares fell 15p initially before recovering, to close 3p down at 350p. The company plans a second interim dividend of 4p.

Under the demerger proposals Pittencrieff shareholders will receive one share in Pittencrieff Resources for every Pittencrieff share held, and five PCI shares for every 24 Pittencrieff shares. There is the option to sell shares in Resources for 100p each in cash through an underwritten placing.

Pittencrieff explains that the point of the demerger is to free PCI to issue its own shares to fund mobile telephone acquisitions, and to release Pittencrieff Resources to re-invest its cash flows in existing and future oil and gas developments. Stock markets are also expected to give more appropriate recognition to the value of each business separately.

Pittencrieff is currently valued at pounds 107m. With its interest in PCI worth pounds 85m on Nasdaq this implies a value of pounds 15m for the oil and gas business.

These activities, which made pre-tax profits of pounds 1.8m last year and have net assets of pounds 22m, are valued by the demerger proposals at pounds 30.6m. The assets Pittencrieff has agreed to buy for dollars 38m are a 50 per cent interest in leases near Corpus Christi, Texas. The balancing interest will be held by Enron Corporation.