LONDON (Alliance News) - JKX Oil and Gas PLC was hit by allegations of releasing "false and misleading claims" on Monday, with further allegations that the board has put its own interests ahead of shareholders as the ongoing battle for the company continues.
Russia-based JKX Oil and Gas is holding a general meeting toward the end of the month after facing strong opposition from its second-largest shareholder, Proxima Capital Group, which holds around a 20% stake in the firm.
Proxima is looking to remove seven out of JKX's nine board members and has proposed replacing them with five of its own nominees as directors, with shareholders set to vote on the proposals on January 28.
JKX Oil and Gas recently sent a circular to shareholders arguing its case against the proposals, but Proxima hit back on Monday after claiming the information released is misleading whilst also making a series of other strong allegations. In addition, Proxima has also released its own circular to shareholders of the company that outlines its own proposals for how to take the company forward.
"Proxima Capital Group, the independent investment firm that is the second largest single shareholder in JKX Oil and Gas PLC, has today published its circular in which it outlines the critical need for leadership change at JKX, while setting out its own vision for the company and also responding to what it believes to be a series of false, flawed or misleading claims made by the JKX board in its general meeting circular," said Proxima.
"We were disappointed, but not surprised, by the company's circular. This continues the pattern of the board apparently putting their own personal interests first ahead of those of the JKX shareholders, and engaging in scare mongering rather than addressing the real issues that have contributed to the company's woeful performance and destruction of value over the past few years," Proxima added.
"In the run up to the general meeting, as shareholders decide what kind of future they want for the company - more of the same or a new refreshed vision and approach to restore value - we call on the board to focus on the real issues," said Proxima.
Proxima claims the current board of JKX Oil has failed to deliver on its promises and underperformed for many years and also questions the "unacceptable corporate governance" of the company, claiming the board lacks independence and has lost key relationships with institutional investors in the company.
It does seem JKX Oil has experienced a breakdown in its relationships with shareholders, as its largest shareholder, Eclairs Group Ltd, has also previously tried to oust the management of the company. Back in December, Eclairs won a court case against the company after JKX Oil tried to count its voting rights as void over a three year period.
Eclairs, which holds around a 27.5% stake in JKX, 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's defence against Proxima's latest claims is that the shareholder is trying to takeover the company without paying a fair premium for the business and that reshuffling and downsizing the board would remove a substantial amount of experience from the board. JKX Oil has also questioned Proxima's plan for the business.
On Monday, Proxima released its own circular outlining its proposed plans for the company moving forward.
"The board says that Proxima is trying to take control of JKX. This statement is false. Proxima has proposed that it be represented by two out of seven board seats. Two out of seven is not control, by any definition, while the proposed management team will be made up of leading international executives who are wholly independent of Proxima," said the shareholder Monday.
Although Proxima said the circular had been released on its website, the document had not been uploaded early Monday morning.
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.
Proxima wants Murray and Ferguson to stay on the board as non-executive directors for continuity purposes, and has proposed appointing 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.
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, whilst 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 candidates 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.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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