1 May 2014 07:00
JKX OIL & GAS PLC
Letter to Shareholders
The Board of JKX Oil & Gas plc has sent the following letter to shareholders:
Dear Shareholder
I am writing to you today to recommend strongly that you vote in favour of all the resolutions at our Annual General Meeting on 4 June 2014. My colleagues on the Board of JKX Oil & Gas plc ("JKX" or "the Company") are in total agreement that the resolutions should be supported by all shareholders. Your vote is vital whether or not you are able to attend the meeting and vote in person. If you are unable to be at the meeting, you may vote by proxy using the form enclosed or if you hold your shares through a nominee, by contacting your nominee/broker.
In particular, we wish to remind shareholders that Eclairs Group Limited ("Eclairs") and Glengary Overseas Limited ("Glengary") together continue to own 39 per cent of the issued share capital of JKX. You will recall that Eclairs and Glengary (the "Collaborating Parties") sought last year to remove our Chief Executive, Paul Davies, and our Commercial Director, Peter Dixon, as directors and to replace them with three of their own nominees, Mr Borys Epshtein, Mr Stanislav Yudin and Mr Oleksandr Ratskevych. Furthermore, Eclairs and Glengary have stated their intent to change the management of JKX.
Eclairs, a British Virgin Islands registered company controlled through a complex web of offshore trusts, is ultimately 59.1 per cent owned by Mr Igor Kolomoisky and 40.9 per cent by Mr Gennady Bogolyubov and family. Glengary is 95 per cent owned by Mr Alexander Zhukov and 5 per cent by Mr Oleksandr Ratskevych.
The Board of JKX remains convinced that Eclairs and Glengary are acting only in their own interests and not in the interests of other shareholders. In particular, the Board of JKX believes that the Collaborating Parties' desire to destabilise the Company is designed to enable them to secure control of JKX's assets without paying any premium to other shareholders.
Specifically the Board of JKX wishes to draw to shareholders' attention that:-
· Eclairs has failed to answer the questions posed to them by the Board of JKX over a year ago about their nominees' experience, qualifications and general suitability as well as the nominees' relationship with Eclairs or with any other JKX shareholder.
· JKX's own investigations revealed that one of the Eclairs' nominees, Mr Yudin, was on the wanted list of the Ukrainian Ministry of Internal Affairs and faced charges for "abuse of authority or office with grave consequences" and was reported in the Ukrainian press to have fled to the UK. Another of the nominees, Mr Oleksandr Ratskevych, is actually a shareholder in Glengary and a representative of its controlling shareholder, Mr Zhukov.
· Given the activities of Mr Kolomoisky and Mr Zhukov in the countries where JKX has its most significant operations, the Board believes that important commercial, governmental and regulatory relationships which JKX has in these regions could be imperilled by their involvement in the management of JKX.
The High Court last September found that your Board had reasonable cause to believe that information provided by Eclairs and Glengary in response to requests from JKX for particulars of their respective interests in JKX was false or materially inaccurate (which the Board continues to believe is the case); and that the Board acted in good faith with the intention of protecting the Company and its shareholders as a whole. Both JKX and Eclairs have appealed various findings in that judgment and the decision of the Court of Appeal is awaited.
You will also recall that at last year's AGM, the Collaborating Parties opposed (without engaging with your Board) market standard plc authorisations (which were in line with institutionally approved guidelines) being sought by your Board on behalf of all JKX shareholders to allot, issue and buy-back shares. Your Board is in no doubt that the Collaborating Parties are seeking to exercise negative control of JKX against your interests.
You will have seen that the management of JKX has made considerable progress over the last year. Average production last year was increased by 18 per cent and Group reserves were also increased. In Ukraine, the Elizavetovskoye field development start-up was on schedule and on budget and the technically difficult 10-stage multi-frac at Rudenkovskoye was executed successfully. The Company's operations have been unaffected by the political unrest and confrontations in Eastern Ukraine; however, the Board continues to monitor the situation closely.
In Russia last year, the Company had its first full year of production, bringing plant capacity to full utilisation. Overall, the Group is making good progress in implementing its two year development plan.
The Board strongly recommends you to record your vote in favour of all resolutions in the interests of all JKX Shareholders. Proxy forms need to be submitted no later than 11.00am on 2 June 2014 or you may vote in person at our Annual General Meeting which will be held at 11.00am on Wednesday, 4 June 2014, at the premises of The Kings Fund, 11-13 Cavendish Square, London, W1G 0AN. I would be very pleased to welcome you if you can come.
Yours sincerely
Nigel Moore
Chairman
For further information please contact:
Cardew Group T: 020 7930 0777
Anthony Cardew M: 07770 720 389
Nadja Vetter M: 07941 340 436
Lauren Foster M: 07887 676 603