LONDON (Alliance News) - JKX Oil & Gas PLC and its substantial shareholder Proxima Capital Group Inc exchanged some final words on Friday ahead of a potentially game-changing general meeting to be held next week.
JKX Oil shares were trading up 2% to 26.0 pence per share on Friday afternoon.
Proxima and JKX Oil have been locked in battle for some time, with Proxima determined to oust most of the management at the company after claiming JKX has consistently underperformed and had poor corporate governance. JKX Oil has stood its ground, and claims Proxima are trying to takeover the company without paying for it.
JKX Oil shareholders will attend a general meeting next Thursday to vote on proposals tabled by Proxima that could result in seven of the company's current nine directors leaving the company to be replaced by five individuals nominated by Proxima.
Both JKX and Proxima have been vocal in the ongoing battle. It has been less than two weeks since Proxima made its last announcement concerning the general meeting, when it said JKX Oil was being "false and misleading", claiming the board was putting its interests before the interest of shareholders.
However, Proxima Friday said: "It notes that in the 11 days since Proxima raised a list of serious concerns about the company in its circular to shareholders, and laid out its turnaround strategy for JKX, there has been no response from the current board, either in detail or general."
"This inaction and lack of engagement would seem to be symptomatic of the way the company has been managed in the recent past," it added.
Proxima's circular to JKX shareholders that outlined its proposed strategy for the company and its proposals to shuffle the management said JKX Oil has consistently failed to deliver on promises and targets and has created "years of value destruction" leaving JKX in a "precarious cashflow position with no obvious way to repay their debts".
"We have only received further private legalistic enquiries from the board concerning how Proxima holds its shares, when we could not have been clearer or more consistent about our ownership, independence and our intentions," said Proxima Chief Executive Vladimir Tatarchuk.
"The board (of JKX) appear more focused on yet more legal strategies to assure their survival, rather than confronting the substantive issues facing JKX. It has never been clearer that the time for change at JKX has come. I respectfully urge all shareholders to vote for our proposals at next week's General Meeting. Every vote counts, and we repeat our call to all shareholders to help us build a better JKX," he added.
JKX Oil has previously defended itself by stating Proxima 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.
Later Friday, JKX Oil responded to Proxima's announcement.
"The circular details the creditable performance of JKX against the extremely difficult constraints arising from JKX's main operations being in Ukraine and substantial decline in worldwide oil and gas prices," the company said.
"The circular also gives very clear reasons why, in the interests of shareholders as a whole, shareholders should vote against the Proxima resolutions. Proxima has failed to respond to the board's substantial concerns," JKX added.
The company reiterated the boost it received in its battle with Proxima earlier this week when it gained the support of Institutional Shareholder Services Inc, a corporate governance and proxy advisory firm that provides shareholders with advice on voting matters. ISS is considered influential, recently for example supporting the proposed mega-merger between Royal Dutch Shell PLC and BG Group PLC.
"ISS has recommended shareholders to vote against all of Proxima's proposed resolutions. The board of JKX unanimously recommends shareholders to follow that advice," said JKX Friday.
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 Ernst & 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.
Although JKX Oil denies it has underperformed, the company has had problems with shareholders. Its largest shareholder, Eclairs Group Ltd, 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, is likely to support the proposals made by Proxima as it too has previously tried to oust the management at JKX, and together the two hold a 47.4% stake in JKX Oil.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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