(Correcting the role of Non-Executives Richard Murray and Alastair Ferguson if Proxima's proposals are successful.)
LONDON (Alliance News) - JKX Oil and Gas PLC took another blow on Friday after one of its major shareholders requisitioned a meeting to try and overhaul and downsize the board to take the company in a new direction.
The latest requisition has been made by independent investment firm Proxima Capital Group, which holds a 19.92% stake in JKX Oil. Proxima wants to downsize the current board to seven members from the current nine and overhaul the majority of the board.
The news follows on from JKX Oil losing a court case earlier this week against another major shareholder, Eclairs Group Ltd, which has previously tried to oust the management at the company.
On Friday, Proxima said it will be sending the details of its requisition to JKX shareholders shortly, which not only include the proposals to sack the entire board but also proposes their replacements.
"Our requisition proposes that the board is reduced in size from nine to seven members, with all four executive members of the board replaced along with three of the non-executive directors, Lord Oxford, Mr Nigel Moore and Mr Dipesh Shah," said Proxima.
JKX's board currently comprises of Chairman Nigel Moore, Chief Executive Paul Davies, Finance Director Cynthia Dubin, Commercial Director Peter Dixon, Technical Director Michael Miller and four Non-Executive Directors Oxford, Shah, Richard Murray and Alastair Ferguson.
That suggests Proxima wants Non-Executives Murray and Ferguson to stay on at the company for continuity purposes.
In turn, Proxima wants to appoint the former global chief operating officer of Ernest & Young Paul Ostling as JKX Oil's new chairman, with the aim of bringing board experience on international blue-chip companies in the UK, US and Russia.
Through Proxima's statement, Ostling said: "JKX's share price has fallen by over 90% over the past five years and it has underperformed against virtually all its peers. The poor performance cannot solely be explained away by the fall in oil price or the geopolitical situation."
"In fact there has been a seemingly irreparable breakdown in the relationships between the company and all of its key stakeholder groups. It would appear that the time has come to change the management team and ensure it is better equipped to restore value and to meet the challenges ahead," he added.
Tom Reed, who has over 20 years of experience in the business and energy within Ukraine and Russia, would become JKX Oil's new chief executive under Proxima's proposals.
"The company seems to have spent large amounts of money for scant return and appears to have missed every significant target it has set itself. It is clear that there now needs to be a thorough review of operations, a renewed focus on core assets and a prioritization of relationships with the relevant local authorities and key stakeholders by a new leadership team," said Reed.
Qualified accountant Russell Hoare, who also has 15 years experience working within Ukraine and Russia, would become JKX Oil's new chief financial officer.
Proxima said all three of those candiadtes are independent of the Proxima. However, the shareholder also proposed appointing two of its own representatives to the board, namely its Chief Executive Vladimir Tatarchuk and its Managing Director Vladimir Rusinov.
Proxima's Tatarchuk said: "We are asking the shareholders of JKX to act now to save their company. The current JKX management have had their chance to demonstrate their ability to run the company properly and to realise its true value. Yet despite numerous promises of improvement, they have continually failed to do so."
"They have rebuffed our offers of greater engagement and the benefit of our expertise. The time has come for the company to be given fresh direction by a new independent and professional leadership team, which is ready to roll up its sleeves on the ground, to stop the destruction of value and to rebuild the company for the benefit of all shareholders," he added.
Last week, another major JKX Oil shareholders with a 27.5% stake in the company, Eclairs Group, won a court case against the company after JKX Oil tried to count its voting rights as void over a three year period.
Back in May 2013, Eclairs was trying to drum up support from fellow shareholders to try and oust current JKX Chief Executive Paul Davies by issuing an open letter urging shareholders to vote against his re-election at the annual general meeting which was held in June 2013.
However, JKX Oil fought back by on the day of the AGM by exercising powers under Article 42 of its articles, allowing JKX to suspend the right of Eclairs vote on the resolutions - meaning the votes cast by Eclairs were not counted.
JKX claimed the information provided at that time by Eclairs concerning its stake in the company was "false or materially inaccurate" in support of its argument that it could suspend any votes cast by Eclairs.
Two-and-a-half years later, the Supreme Court of the UK ruled that Eclairs can appeal against JKX's use of Article 42 to suspend the votes cast by Eclairs at AGMs. That meant the votes cast by Eclairs had to be taken into account and seen as valid. Since that AGM in 2013, JKX has not considered any votes cast by Eclairs at its meetings - blocking the shareholder from attempting to influence the company.
Last week when that court ruling was made, JKX Oil released a statement noting the court's decision, but did not provide much guidance on how it would affect the results of the previous AGMs, especially the latest one held in June.
The company said last Friday it would"consider the implications" of the judgement, adding it would "continue to take all appropriate steps to protect and promote JKX's best interests."
Eclairs continues to believe JKX Oil has continued to deteriorate, and will likely welcome the proposals made by Proxima, which together hold a 47.4% stake in the company.
JKX Oil has not yet released its own statement in response to the requisition made by Proxima.
JKX Oil shares were trading up 1.8% to 28.0 pence per share on Friday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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