Heritage said in a statement on Friday that an investigation by the Financial Services Authority (FSA) could affect the ability of members of Genel's operational management team to assume their proposed roles in the combined entity. "Heritage understands that relevant members of the Genel team are assisting the FSA with a view to bringing this matter to a swift conclusion," the company said.
Heritage said it remained in merger talks with Genel and would send shareholders the prospectus on the deal for their approval as soon as practicable. It had hoped to send the prospectus out in August and a source close to the matter said the probe would likely delay the merger by "a couple of months."
Unlisted Genel was not available for comment. Heritage declined to name the Genel managers involved or to confirm whether the probe was into the individuals or the company, or whether Genel team members were simply providing information. FSA spokeswoman Abi Jones declined to say what the nature of the investigation was or to give reasons why the FSA would limit an individual's ability to take up a position with a British-listed company.
Richard Griffith, oil analyst at Evolution Securities, said the probe was unlikely to have any impact on the proposed merger. "Heritage's own operational management is more than adequately qualified and the rationale for the deal lies in the assets rather the people," Griffith said in a research note.
Heritage and Genel announced plans in June to combine their large oil finds in Iraq's semi-autonomous Kurdish region. Under the terms of the proposed merger, Çukurova, one of Turkey's largest conglomerates, would end up with around 50 percent of the enlarged company. Heritage's chief executive and around 30 percent shareholder is Tony Buckingham, whose miliatry companies previously provided mercenaries for hire in Africa, according to a Heritage prospectus produced last year.
