5th Apr 2016 08:59
LONDON (Alliance News) - PetroNeft Resources PLC on Tuesday took action ahead of an upcoming extraordinary general meeting that could potentially lead to two substantial shareholders being blocked from voting on proposals to oust the company's board, including the shareholder that proposed the board change.
PetroNeft has issued restriction notices to Natlata Partners Ltd, the company that has proposed removing four of Petroneft's current board and replacing them with three of its own nominees, and another company called General Invest Overseas SA.
Shareholders will head to the polls on April 18 to vote on whether to remove Non-Executive Chairman David Golder, Chief Executive Dennis Francis, Chief Financial Officer Paul Dowling and Executive Director David Sanders.
They will also vote on whether to appoint Russian businessman Maxim Korobov, the controlling shareholder of Natlata, as the PetroNeft's new chief executive alongside two independent directors, Anthony Sacca and David Sturt. Natlata wants the two existing non-executive directors of PetroNeft, Thomas Hickey and Gerard Fagan, to remain on the board for continuity purposes.
Natlata has been critical of PetroNeft for some time, calling for a similar meeting back in May 2014.
However, PetroNeft on Tuesday said that since then it had noticed a new significant shareholding on its shareholder register held by a nominee company, prompting the company to try to determine the ultimate beneficiary of that stake.
PetroNeft has concluded that a company called General Invest Overseas is the ultimate beneficiary of the 10.7% holding.
Since then, the company said it has asked for additional information regarding the stakes held in the company by both General Invest Overseas and Natlata, alleging both companies either made "no reply" or submitted "incomplete replies".
That led PetroNeft to issue restriction notices to both General Invest Overseas and Natlata, with Natlata confirming it had received the notice on Monday.
Importantly, the restriction notice currently only requires General Invest Overseas and Natlata to provide the information that has been previously requested by PetroNeft within 14 days, giving both companies until April 14 to supply that information.
If Natlata and General Invest Overseas fails to provide the correct information to PetroNeft in that timeframe, then PetroNeft said "certain rights attached to such ordinary shares, including voting rights may be suspended pending a satisfactory response."
Natlata had said on Monday the restriction notice would prevent it from attending, speaking at, or voting at the EGM.
That is significant, as that would mean Natlata, with a 29.47% stake, and General Invest Overseas, with a 10.7% stake, would not be able to vote on the propositions made by Natlata, which could seriously dent any hope of them being approved.
It is the latest move by PetroNeft to try to fend off the proposals, as it struck a deal last month to take a USD35.0 million loan from its partner in Russia, Oil India Ltd, which is contingent on the current board of PetroNeft remaining at the company.
That means shareholders will have to make a choice next month as to whether they want to remove the current board and face repaying the loan, something PetroNeft can not currently do based on its financial position, or reject Natlata's resolutions and allow PetroNeft to continue as before.
Natlata has made several recent allegations against PetroNeft as it tries to drum up support from other shareholders, claiming the board has "squandered" almost USD250.0 million on investment without actually increasing production and presiding over a "disastrous USD500.0 million loss in market value".
PetroNeft has claimed that allowing Natlata to change the board could lead to the company's strategy being changed or to related-party transactions being undertaken that could be to the "detriment of the independent majority of shareholders", adding that the new board could also seek to cancel the company's shares from trading.
PetroNeft shares were trading down 2.4% to 2.0 pence per share on Tuesday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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