THE attempt by a rebel investor in Bowleven to promote a boardroom cull at the oil and gas firm has been dealt a blow after corporate governance specialists recommended shareholders vote against all but one of its proposals.
Crown Ocean Capital P1 has stoked controversy with a call for all the directors of Edinburgh-based Bowleven to be removed except for chief operating officer David Clarkson.
The investment firm has proposed two new directors be appointed to help implement a radical change of strategy at Cameroon- focused Bowleven.
The proposals have been denounced by the Bowleven management team led by chief executive Kevin Hart, but will be voted on by shareholders at a general meeting on 14 March.
Yesterday two firms that provide advice to investors on issues such as board appointments and executive pay joined the debate.
Institutional Shareholder Services recommended Bowleven shareholders vote against all nine of the resolutions that will be considered at the general meeting.
The Pensions & Investment Research Consultants firm has recommended shareholders oppose eight of the resolutions but support the one proposing the removal of non-executive director Phil Tracy from Bowleven’s board.
In its report ISS said: “The dissident has not made a sufficiently convincing case for the removal of the majority of the current board … and the appointment of two new director nominees”
The firm noted Bowleven’s share price performance was reflective of a sector which has been hit by the oil price fall. The Bowleven board has signalled 2017 will be a key year and taken the necessary steps to reduce general and administration costs.
While acknowledging there may be some validity in concerns expressed by Crown Ocean about capital allocation at Bowleven, ISS concluded: “We believe that company’s performance and lack of any significant concerns with regards to the operating of and oversight exercised by the board, does not indicate that change on the board is warranted at this time.”
PIRC noted a lack of clarity regarding the relevant experience of the directors proposed by Crown Ocean, Chris Ashworth and Eli Chahin. Crown Ocean has described Mr Ashworth as a seasoned corporate lawyer and Mr Chahin as a veteran turnaround specialist.
Noting that Crown Ocean has proposed Mr Chahin could if necessary act as interim chief executive to implement Bowleven’s new strategy PIRC stated: “Crown Ocean has identified what it believes this strategy should be in its statement. This raises concerns that he will be acting in Crown Ocean interest only.”
It said Crown Ocean had not explained why it intended to replace all board members, save Mr Clarkson.
“Although there are concerns about the Company’s recorded losses and the current level of Board independence, Crown’s approach cannot be supported,” PIRC concluded.
The consultancy supported the recommendation to remove Mr Tracy noting as a former operations director of Bowleven he could not be considered independent. Bowleven said it had acknowledged Mr Tracy was not considered fully independent for that reason but viewed his contribution as constructive and valuable.
Monaco-based Crown Ocean Capital has a 16.2 per cent stake in Bowleven and is owned by German financiers Christian Petersmann and Konstantin Stoyanov. It has accused Bowleven of a catastrophic financial performance and said the company is at risk of wasting its remaining $95 million (£76m) cash.
Crown Ocean wants to transform Bowleven into a holding company which will be able to return excess cash to shareholders. The firm says it is acting in the interests of all shareholders.It did not comment on the reports produced by ISS and PIRC.
Bowleven has said Crown Ocean wants to turn the company into a cash dispenser for its own benefit and lacks a strategy to maximise value from the company’s assets in Cameroon. The board says Bowleven’s Cameroon plans could deliver material upside while it has reduced overheads significantly.
All the company’s board members, including Mr Clarkson, have recommended shareholders vote against the resolutions proposed by Crown Ocean.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here