Bowleven fights Monaco shareholder’s attempt to take control

Bowleven plc, a UK-based oil and gas company with African assets, has urged its shareholders to oppose attempts made by the Monaco-based private investment vehicle, Crown Ocean Capital (COC), and a shareholder in the company, to take control of Bowleven. 

Following its requisition of a General Meeting, issued on 24th of January, COC has continued to purchase Bowleven stock. According to a filing on Wednesday morning, the Monaco-based investor increased its stake in Bowleven to 15.56%.

Bowleven responded on Wednesday saying the board will unanimously be recommending shareholders to vote against all resolutions made by COC. In the meantime, shareholders are urged to support the board and take no immediate action with regard to their holdings, the company said.

According to Bowleven, COC’s intent is to take control of Bowleven without paying fair value and with no credible strategy to maximize the value from the company’s key assets, Etinde and Bomono.

Further, the company said that COC’s stated intention is to convert Bowleven into a holding company stripping the cash from Bowleven’s balance sheet, and leaving it in a precarious position potentially unable to fund the investment necessary to realize any or all value from its Cameroon assets, which substantially weakens the company’s bargaining position.

In addition, Bowleven said, COC intends to remove the existing board and appoint its own representatives, placing the management of the company in the control of a single minority shareholder, with no remaining independent directors representing the interests of shareholders. “This is exceptionally poor governance, delivering stewardship of the company into the hands of unvetted COC appointees and removing all governance safeguards for other shareholders,” the company said.

“COC’s proposal has absolutely no merit,” Bowleven Chairman said. 

Also, the company explained that the board will lose vital relationships with the Cameroon Government which is the key to progressing the assets and realizing value, and lose its entire relevant oil & gas experience and industry relationships.

Bowleven added that throughout COC’s near-year long involvement with the company, COC has displayed “utter inconsistency.” Namely, Bowleven claimed, COC’s first approach, in August 2016, was to advocate an MBO, but desisted when the management made it clear that the offer price must be at a level the board could recommend. COC’s second approach was to support the existing management team, chairman and strategy, and to impose new non-executive directors, but the legal procedures were defective. Finally, COC’s third approach is to dismiss all board members, except the Chief Operating Officer, who previously they sought to dismiss.

Chairman, Billy Allan, said: “Ahead of our formal response, we wish to give timely advice to shareholders that COC’s proposal has absolutely no merit. It is self-evidently, and solely, a means to turn Bowleven into a cash dispenser for themselves, by taking control of the board.

By contrast the company is progressing exciting plans at Etinde and Bomono that have the potential to deliver material upside. We see a clear choice for shareholders between losing control of the company, or retaining substantial upside in an E&P company at a favorable point in the market cycle.”

Bowleven’s strategy includes progressing the development plans at the Etinde permit, off Cameroon. The company also noted it has a balance sheet with $95m of cash and no debt. Part of its strategy also includes employing strict capital discipline. The company said it already had in place a means to return excess cash to shareholders with its share buyback program, but COC blocked this.

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