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Cadogan Petroleum expects to increase indirect stake in Proger after robust 2018 results

Cadogan said Proger’s 2018 results confirm that the convertible loan agreement offers exposure to "realisable growth at a balanced level of risk to shareholders"

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Cadogan entered into a €13.4mln loan agreement with Proger in February

Cadogan Petroleum PLC (LON:CAD) expects to increase its indirect interest in Italian oil and gas engineering services firm Proger Ingegneria.

In February Cadogan entered into a €13.4mln loan agreement with Proger’s parent company Proger Managers & Partners Srl (PMP).

In exchange for providing the loan, Cadogan has a call option to buy 33% of the participating interest that PMP has in Proger Ingegneria, giving it an indirect 22% interest in Proger. 

Cadogan said on Friday that it expects its indirect interest in Proger to rise to 25% following a capital increase.  

The company also noted strong results from Proger for the 2018 financial year.

Proger reported a 24% gain in earnings (EBITDA) to €11.3mln while pre-tax profit increased nearly 4% to €6.1mln.

“Proger’s 2018 results confirm that the convertible loan agreement offers exposure to realizable growth at a balanced level of risk to Cadogan shareholders; it also diversifies Cadogan’s portfolio, which is a key pillar of our strategy,” said Cadogan chief executive Guido Michelotti.

“We look forward to a positive 2019, with Proger delivering on its business plan, using the financial resources made available to them at the beginning of this year.”

Cadogan said the financial results will raise the value of Cadogan’s indirect participating interest if shareholders approve the exercise of the conversion option.

Proger is using the loan, which carries an interest of 5.5% per year, to finance its business plan that is targeting a “material increase” in EBITDA over the next five years.

Quick facts: Cadogan Petroleum PLC

Price: 2.4 GBX

LSE:CAD
Market: LSE
Market Cap: £5.86 m
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