11 Jan 2016 07:00
Proxima rebuts false and misleading claims made by the JKX Board
and sets out its vision for JKX
11 January 2016, London - Proxima Capital Group ("Proxima"), the independent investment firm that is the second largest single shareholder in JKX Oil & Gas Plc ("JKX" or "the Company"), 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 ("GM") circular.
Proxima Capital Group CEO Vladimir Tatarchuk said:
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.
In the run up to the GM, 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. Namely:
· Their consistent failure to deliver on their own promises and targets;
· Too many years of value destruction and underperformance against any objective set of metrics; underperformance that cannot solely be explained by the fall in oil prices and the situation in Ukraine;
· Their unsatisfactory operational, financial and strategic management, defined by serial litigation with key stakeholders, poor strategic decisions which have burned hundreds of millions of dollars in capital projects in recent years for scant return to shareholders, and an apparently precarious cash flow position with no obvious way to repay their debts;
· Unacceptable corporate governance, with a Board that has seen a breakdown in its relations with past and former institutional shareholders, a Board that lacks independence, which executes ineffective, long-distance management of the assets and seemingly exists to safeguard its own interests rather than those of JKX shareholders.
Instead of addressing the real operational and strategic issues that can avoid a value-destructive liquidity crunch, turn the Company around and restore shareholder value, they appear to have used their circular to make claims which are patently false, as they seek to create a diversion, and to build a misleading picture of Proxima and what it is trying to achieve for JKX shareholders.
For example, 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.
The Board say that we are proposing a "Russian directed" Board, which will struggle in Ukraine and lacks the requisite Ukraine experience. This statement is untrue. The Board would be led by proposed Chairman Paul Ostling, a dual US-UK citizen, former global COO of Ernst & Young, during which time he advised hundreds of major LSE and NYSE listed businesses. The CEO and executive Board member would be Tom Reed, a US national with years of experience in oil and gas. The CFO and executive Board member would be Russell Hoare, a UK national with 15 years of relevant experience in the region.
As to the Ukraine track record of the team we have proposed, this track record is excellent, as we demonstrate in more detail in our circular. Contrast this with the 'Ukraine experience' of the current Board, which seems to be made up of taking a half billion pound CIS focused oil and gas business and transforming it into a disparate CEE / CIS play worth less than 50 million pounds. Frankly, we believe this is "experience" that the JKX shareholders could have done without.
Why are we doing what we are doing? We have a stake of nearly 20% in JKX, and believe that this stake could and should be worth several multiples of what it is today. We are sure other shareholders have the same view of their own stakes. At the same time, the Board claimed that we did not make our true intention clear. Therefore, let me make it very clear right now.
· Our intention is to vote for a team that we believe has the necessary skills, focus and on-the-ground commitment to do what is necessary to rebuild value at JKX;
· Our intention is to vote for a team that will be able to re-engage with all of the Company's stakeholders;
· Our intention is to vote for a team that is committed to reinstating proper corporate governance at the Company in order to ensure that the interests of all shareholders will be fairly represented.
We look forward to continuing the dialogue we have begun with all stakeholders, who we believe are in agreement that the time for change is now.
A full copy of the Proxima Capital Group circular, which contains more details on Proxima's proposed turnaround strategy, can be downloaded here: http://www.proximagroup.ru/en/news/.
ENDS
About Proxima Capital Group
Founded in 2013, Proxima Capital Group is an independent proprietary investment and advisory firm. Our independent status, without any external affiliations, ensures that we always act in the best interest of clients and it helps us to seek out the most effective solutions without any vested interest constraints.
PCG employs a team of highly skilled professionals, including four partners. Each of the partners has had at least 15 years of successful practice in their sector. Members of our team have completed more than 100 M&A and fund-raising transactions.
The highest priority of our work is mutual trust and client-focused service. PCG believes in a comprehensive and tailor-made approach - our team is able to provide our customers with a variety of business services simultaneously. Our specific areas of expertise include turnaround management, M&A, fund raising and debt restructuring. More details can be found at www.proximagroup.ru
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