Shareholder action - where we stand6 Aug 2019 09:01
RK & others. Yep the role of shareholder action groups (‘’SAGs” no ‘L’) has not been a happy one. There are two big issues. First, numbers - do shareholders have enough votes to actually succeed in any actions they bring to an EGM vote. Normally the odds are stacked against SAGs because management has sufficient votes from institutions to usually hold sway, and SAGs scramble to assemble a few % & thus fail. In COPLs case bizarrely its the opposite, the Board is seemingly only able to call on around 5% of COPL shareholder votes, we have around 5x that amount provided all the main holders agree on how to vote!
There is inevitably a lag between calling an EGM (ie getting a motion accepted as meeting the criteria for an EGM) & the actual EGM/vote taking place, of anywhere between 2 & 3 months. This delay can mean you are fighting a battle that by the date the EGM is held may be irrelevant.
But the second issue is just as important - what are we trying to achieve? All to often angry investors sometimes seek to ‘punish’ management with an EGM, we have not taken this route, indeed we are wary of proceeding because we don’t want our actions to potentially worsen the situation rather than improve it. Back in June we felt there were two main issues - one to stop any more placings at crazily dilutive prices and also to seek a method of getting shareholders concerns & interests taken into account. To achieve the first one we sought to curtail dilution by seeking to make all share issues above say 10% subject to a shareholder vote. But one danger of this would be it might disrupt the financing package for OPL226 which is widely anticipated to contain an equity related portion. Forcing management to put this to a vote could cause a delay of say either side of 2 months - in the event of us finally getting NNPC approval the last thing we would surely want is an enforced delay of say another 2+ months whilst a shareholder vote is held!
On the related but more long term concern of getting shareholders interests/concerns taken into account, we considered voting down a number of Arthur’s Board at the AGM, something we could have easily done, at least two holders individually have more votes than the entire vote the Board lined up behind them. But again we felt this would have been a declaration of ‘war’ and that seeking at least some shareholder representation should ideally take place with the current Board’s agreement. Of course that may change & come the next AGM we may decide to propose & vote onto the Board a couple of our chosen representatives. Who of course every voting shareholder has the right to vote for or against just like they do for the existing Board.
So in summary given the extremely delicate state of COPL’s finances and what we understand to be the very final stages of the NNPC approvals process we have decided not to take any short term action that could just as easily have negative implications for shareholder interests as positive o
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