CORRECT: Proxima Turns On JKX Oil Amid Eclairs Effort To Oust Board

(Correcting when the current board was appointed) LONDON (Alliance News) - The board of ...

Alliance News 19 May, 2017 | 10:36PM
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(Correcting when the current board was appointed)

LONDON (Alliance News) - The board of Ukraine-focused JKX Oil & Gas PLC could be overhauled for a second time after one of its major shareholders called an extraordinary general meeting to put forward proposals to appoint one director and oust three existing board members.

JKX Oil's entire board was overhauled in January 2016 following a lengthy battle with 20% shareholder Proxima Capital Group, which resulted in five directors being kicked off the board and the subsequent resignation of the remaining directors that were left.

Proxima's nominations then took over the board. Thomas Reed, Russell Hoare, Paul Ostling, Vladimir Tatarchuk and Vladimir Rusinov were all appointed to the JKX Oil board. Of those directors, two were acting as nominees and representatives of Proxima: Tatrchuk, who took over as chief executive, and Rusinov, who was to be managing director.

In April 2016, two new non-executives were recruited to plug the gap left on the board following the overhaul, as JKX Oil welcomed Alan Bigman and Bernie Sucher as independent members of the board.

JKX Oil's largest shareholder with a 27% stake, Eclairs Group Ltd, had made attempts before Proxima's success in replacing the board and backed the changes made by Proxima.

Commenting on the board changes in January 2016, Eclairs Director Michael Bakunenko said the firm was "delighted" that the resolutions passed. He said it was "now time to look to the future, and we believe that the appointment of a new management team, under the supervision of a highly qualified and experienced independent board, will lead to a turnaround in the fortunes of the company and the greater protection of shareholder rights".

However, Eclairs Group has now made another attempt to interfere with the board by calling an EGM last month proposing that Bakunenko is appointed to the board of JKX Oil, followed by an additional proposal weeks later to remove all seven existing JKX Oil directors.

That means Eclairs is also attempting to remove the directors appointed to the board as proposed by Proxima, which Eclairs previously had supported.

Notably, the two independent non-executives appointed after the overaul would have been put forward for re-election regardless.

However, noting that Eclairs was proposing to remove seven directors and replace them with just one, JKX Oil opened discussions with the shareholder to seek clarity over the situation. That resulted in Eclairs withdrawing its proposal to remove all of the directors and replaced with a new one to appoint Bakunenko and remove CFO Russell Hoare, CEO Thomas Reed and Rusinov, now a non-executive director.

The story took a further twist on Friday when JKX Oil said "it has become clear" that Proxima and its two nominee directors "no longer support the current composition of the board" and instead "favour a significant restructuring of the board" - meaning its two largest shareholders are unhappy and either seeking or considering seeking change.

"Proxima have neither proposed any particular board composition, nor disclosed how they intend to vote on the Eclairs proposals or the draft AGM resolutions being prepared by the company. They have however notified the board that they may choose to do so in the future," said JKX Oil.

"As a consequence, the remaining board directors expect that some, if not all, of the AGM resolutions which will be sent to shareholders in the coming days will not have the unanimous recommendation of the board," JKX Oil said.

JKX said the "executive and independent directors" are "particularly disappointed" with the withdrawal of support by Proxima, flagging the fact that the board's current composition was the result of the Proxima-induced overhaul completed in January 2016.

"The executive and independent directors are particularly disappointed to be announcing the withdrawal of support by Proxima, the shareholder that led last years' overhaul of the board, at a time when the company is launching the groundbreaking field stimulation program announced only yesterday, a central plank of the turnaround strategy previously supported by Proxima," said JKX Oil.

The company said on Thursday it has contracted oilfield services behemoth Schlumberger Ltd to stimulate 11 wells with multiple zones during the second and third quarters of 2017 as part of the Rudenkivske field programme in Ukraine.

"The executive and independent directors will, over the coming days, carefully consider the AGM resolutions which best serve and protect the interests of the company, and the corresponding recommendations they will make to shareholders. In the meantime, shareholders should take no further action," JKX Oil added.

JKX Oil shares closed up 2.7% at 19.38 pence on Friday.

By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance

Copyright 2017 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article
Security Name Price Change (%) Morningstar Rating
JKX Oil & Gas PLC 21.25 GBX 9.68 -
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