Palliser Capital has a clean sweep at the Capricorn Energy vote today, replacing the board with six of its nominees.
Capricorn held its vote this afternoon. The proposed merger with NewMed Energy now looks increasingly unlikely to go through.
The vote appoints Hesham Mekawi, Christopher Cox, Maria Gordon, Craig van der Laan, Richard Herbert and Tom Pitts to the board with immediate effect. They all received 99.2% approval at the vote.
“We are pleased by the results of today’s vote and look forward to receiving further updates from the new Board of Directors as they assess the best path forward for Capricorn,” said a Palliser representative.
Capricorn CFO James Smith resigned from the board this morning, before the vote, as did Keith Lough.
Chair Nicoletta Giadrossi resigned on January 24 as did CEO Simon Thomson. Also leaving in January were Peter Kallos, Alison Wood and Luis Araujo.
The only remaining members of the board were Catherine Krajicek and Erik Daugbjerg.
Capricorn’s shares have drifted 5% lower over the last month, falling 1.57% today.
Capricorn set out a plan in 2022 to merge with Tullow Oil, which Palliser objected to. The company then dropped its Tullow plan and opted for a merger with NewMed Energy instead.
Capricorn had planned to hold a vote on the merger with NewMed today as well. However, Palliser objected to this, saying its nominees would not have enough time to give an updated opinion on the deal.
It will hold the vote now on the proposed combination on February 22.
Deal terms
Panmure Gordon’s Ashley Kelty predicted the NewMed deal would likely be terminated, unless the terms of the deal change.
“It remains to be seen if NewMed would even consider doing so. Otherwise, I imagine they’ll be looking to accelerate activity in Egypt as Palliser had indicated that they thought there was unrealised potential there,” Kelty said.
Palliser has not yet provided guidance on what its next steps will be. The company has a 7.13% stake in Capricorn, as of January 13, while Madison Avenue Partners has 8.06% and Kite Lake Capital Management 7.39%.
Palliser’s nominees have substantial experience. Mekawi, for instance, served until recently as president for BP North Africa.
While the shareholders objected to the deal with NewMed it is not yet certain what a better path forward would be. One possibility has been a sale of contingent rights, in the UK and Senegal, in order to return cash to shareholders.
However, given Capricorn’s major asset is a stake in a non-operated Egyptian portfolio, growth is limited – unless through M&A.
Updated at 4:52 pm with comment from Ashley Kelty and Palliser.