WEST of Shetland-focused Hurricane Energy is facing a fresh challenge after a court decided that shareholders should get a vote after all on a controversial restructuring it plans to complete.
Hurricane has proposed a debt-for-equity swap that will result in creditors owning the vast bulk of the company.
The Surrey-based business previously stoked excitement about the potential of the West of Shetland area after making what appeared to be big finds. Shares in the firm plunged after it suffered production reverses and slashed estimates of the size of the finds.
The proposed restructuring plan has drawn scathing criticism from the Crystal Amber Fund investment business, which last week tried to instigate a boardoom coup at Hurricane.
READ MORE: Shetland oil pioneer faces boardroom coup after seeing valuation plunge
Crystal Amber said the plan proposed by Hurricane’s directors would result in shareholders’’ interests in the firm being wiped out almost completely in favour of holders of $230m bonds issued by the firm. It criticised Hurricane directors for proposing to complete the restructuring without putting the plan to a shareholder vote.
Hurricane’s directors have claimed there is no practical alternative to the plan under consideration and maintained they were not required to put the matter to a shareholder vote under the relevant legislation.
The company said yesterday that a High Court judge had decided that shareholders should be able to vote on the plan. It will require the support of 75 per cent of shareholders voting in order to win their approval. However, a vote against the plan by shareholders may not be enough to block it.
Hurricane noted that the court could approve a plan even if shareholders or bondholders dissented. This appears to put the onus on shareholders to come up with a viable alternative plan before the bondholder meeting, which has been pushed back to June 11, from June 4.
Hurricane’s board said if the proposed restructuring was not approved at one or more of the meetings of bondholders and shareholders or failed to win court sanction it was likely there would be an insolvent liquidation of the company.
READ MORE: Giant West of Shetland field start up welcomed by oil pioneer
Shares in the firm closed down 0.21p at 1.3p. They fetched 60p in 2019.
Crystal Amber Fund has a near 15 per cent stake in Hurricane.
Last week the fund called for Hurricane to hold a general meeting at which shareholders would be able to vote on its proposal to have the company’s chairman, Steve McTiernan, and all four non-executive directors removed from the board.
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