FSA inquiry hits Heritage-Genel deal

UK-based oil company, Heritage Oil's proposed merger with Turkey's Genel suffered a huge setback when it emerged that members of the Turkish group's management were under investigation of the Financial Services Authority (FSA).

Shares in Heritage that operates in the Kurdish region of Iraq and in Uganda were down after it said the inquiry might lead to a change in the management structure on lines originally envisaged for the enlarged group.

In a statement included in its first-half results, the group said that it had recently been made aware of an investigation by the FSA that could potentially keep some members of Genel's operational management team to take up their roles in the combined entity.

The group added that Heritage understood that relevant members of the Genel team are assisting the FSA with a view to bringing the matter to a swift conclusion. It said Heritage would update the market on these issues when it is in a position to do so.

The group said it remained committed to the deal. An investigation will result in a delay of five to six weeks.

The regulator has however not revealed the nature of the investigation or to offer reasons regarding the FSA imposing constraints on an individual's right to take a position with a London-based company.