More investors voice support to oust most of Capricorn Energy board

A hedge fund calling for an overhaul of Capricorn Energy’s board has revealed that three other major shareholders have expressed support for the move.

Palliser Capital demanded on Monday that investors are given a chance to vote to remove seven board members of the energy exploration firm at an extraordinary general meeting.

Having already received backing from several important Capricorn investors, Palliser said on Wednesday that letters of intent have now also been sent by Irenic Capital Management, VR Global Partners and another unnamed backer. 

It means that 40 per cent of Capricorn investors now back calls for a shake-up of the group’s board. 

Indignation: Much of Palliser’s criticism of Capricorn centres on a proposed merger agreed between the energy exploration form and NewMed Energy, an Israeli oil and gas partnership

Among those Palliser wants ousted are Simon Thomson, who has been chief executive since July 2011, finance boss James Smith, and chairwoman Nicoletta Giadrossi.

The business is seeking to replace the relevant management with six independent directors, among them the former head of Frontera Energy, Richard Herbert, and ex-Spirit Energy boss Chris Cox.

Support for this proposal has already been received from shareholders Madison Avenue Partners, Kite Lake Capital and Newtyn Management.

A day later, Legal & General Investment Management (LGIM) joined the chorus of dissenting investors as it accused the board of overseeing a ‘substantial breakdown in relations.’

Palliser has accused Capricorn directors of undermining confidence, wasting money on failed projects and ‘chronic underperformance’ relative to other industry peers.

Much of its criticism centres on a proposed merger between Capricorn and NewMed Energy, an Israeli oil and gas partnership, which was initially agreed upon in late September.

This followed a failed attempt to forge a tie-up with fellow FTSE 250 company Tullow Oil, which also received blowback from investors concerned it would give the debt-stricken Irish firm access to Capricorn’s cash pile.

Under the terms of the NewMed deal, shareholders would receive $620million in special dividends before the transaction is finalised and own 10.3 per cent of the enlarged group.

But Palliser has lambasted this proposal, claiming it is too low and has brought its own alternative plan that it claims could realise up to 400p per share for investors.

On top of this, the company believes Capricorn directors have failed to provide sufficient transparency about what strategic alternatives are on the table should the deal fall through and is underplaying the firm’s current potential. 

In a letter published earlier this week, it wrote: ‘We believe the board has chosen to talk down Capricorn’s standalone prospects in the hope that investors will ultimately accept a deal that fails to offer shareholders fair value.

‘In our view, this unacceptable course of action serves only to pressure shareholders and falls far short of the resolute focus on value maximisation that we collectively require and deserve.’

Capricorn Energy has declined to comment on the latest announcement by Palliser.

This post first appeared on Dailymail.co.uk