Rockhopper Exploration PLC (AIM:RKH) shares slumped more than 20% in early deals Monday morning as the company's dispute with the Italian authorities deepened.
The company, in a statement, told investors that the Italian government had applied to the International Centre for Settlement of Investment Disputes (ICSID) seeking to annul a prior award by the ICSID in Rockhopper’s favour, worth €190mln plus interest.
Rockhopper noted that it's third-party legal funding, which supported the energy firm thus far, does not cover any costs arising past the date of the ICSID award (23 August) though having anticipated that Italy may seek to annul it had put in place a non-binding funding arrangement designed to allow it to continue its legal fight.
It said it will now consider activating this facility along with other funding possibilities.
"It is disappointing although perhaps not surprising that the Italian government has chosen to pursue an annulment of the award,” said chief executive Samuel Moody in the statement.
“Based on legal advice we believe annulment proceedings are likely to take approximately 18 to 24 months, albeit interest will commence accruing again in December 2022.
“We remain confident in the strength of our case, as was reflected in the unanimous decision underpinning the award in August, and very much hope and believe the annulment request will be rejected in due course," he added.
Rockhopper, meanwhile, noted that a separate success fee of approximately £3mln is due to the company's legal representatives on establishing liability and an award requiring Italy to pay over €25mln in damages. This item is not covered by either funding agreement, and, in light of latest developments it is now in “productive discussions” with its legal representatives as regards to the payment.
In London, Rockhopper shares were down 2.7p or 21% changing hands at 10.23p.