TIDMRBD
RNS Number : 5622W
Reabold Resources PLC
13 December 2023
13 December 2023
Reabold Resources plc
("Reabold" or the "Company")
Publication of Circular and Notice of Requisitioned General
Meeting
As announced on 22 November 2023, Reabold received a Requisition
Notice (the "Requisition Notice") from Pershing Nominees Limited
("Pershing"), which owns approximately 7.79% of the Company's
issued share capital on behalf of thirteen beneficial shareholders
(the "Requisitioning Shareholders"), requesting the Board to
convene a general meeting under section 303 of the Companies Act
2006 as amended ("Act"), to consider resolutions which, taken
together, remove the entire current board of directors and replace
them with four new directors of their own choosing.
Accordingly, the Company has today published a circular to
Shareholders (the "Circular") in response to the Requisition Letter
and a Notice of General Meeting (the "Notice") convening the
requisitioned General Meeting for Shareholders which is to be held
at 8th Floor, The Broadgate Tower, 20 Primrose Street, London EC2A
2EW at 10:00am on 10 January 2023.
Extracts from the Circular are available below. A copy of the
Circular and Notice will shortly be made available to view at
www.reabold.com .
The Board Unanimously Recommends Shareholders VOTE AGAINST ALL
Resolutions for, inter alia, the following reasons:
1. The Requisitioning Shareholders are, once again, attempting
to gain control of Reabold, its operational asset base and its
cash, without paying a control premium.
2. The Board believes that the motives of the Requisitioning
Shareholders cannot be trusted and the Board has multiple examples
of Kamran Sattar attempting to extract value from Shareholders for
self-serving gains.
3. The Requisitioning Shareholders have conducted themselves in
a manner that the Board considers to be unprofessional, and the
Board condemns the decision to force the Company to commit further
valuable time and resources to yet another proxy battle.
4. The Board believes this second requisition for a general
meeting is vexatious in nature and serves only to disrupt and
impede the Board and Reabold.
5. The Board finds it concerning that the Requisitioning
Shareholders have not proposed a clear strategy for Reabold and its
assets.
6. The Board is concerned that there is a potential conflict of
interest with respect to the proposed CEO, Andrea Cattaneo (who is
the current CEO & President of Zenith Energy) and another
Proposed Director, José Ramón López-Portillo Romano (the current
Chairman of Zenith Energy). Zenith Energy is listed on the Main
Market of the London Stock Exchange and is a competitor of
Reabold.
7. The Requisitioning Shareholders state that they are
dissatisfied with the Company's strategy, yet in previous
communications with the Company, Kamran Sattar communicated his
alignment with the strategy, and his desire to publish a joint
statement of support for the Board on 12 October 2023.
8. The Board believes the Requisitioning Shareholders have
proved that they are not aligned with ALL Shareholders and has
evidence that they want control of the Company and its assets and
are acting in a self-serving manner.
9. Should the Requisitioning Shareholders be successful in
removing the entire existing Board, which is currently compliant
with the QCA Code's guidelines, the corporate governance standards
of Reabold would be jeopardised.
A statement from the Board of Reabold:
"It is the Board's view that the requisitioned general meeting
is an opportunistic attempt to, once again, seize control of the
Company and its assets without paying a control premium to all
shareholders.
"The Board believes the motives of the Requisitioning
Shareholders cannot be trusted and that the timing of the
Requisition Letter is not coincidental; it is in fact
opportunistic. The first requisition coincided with the first
tranche payment due from Shell for the sale of Corallian. This
second requisition coincides with the subsequent GBP5.2 million
received from Shell on 5 December 2023 and GBP4.4 million expected
in the coming months. The timing is such that the Proposed
Directors would be in control of a well-funded company should the
Resolutions be duly passed, and the Board strongly believes that
the Requisitioning Shareholders and Proposed Directors are using
this requisitioned general meeting as a way of attempting to take
control of your Company, your cash and your assets.
"Of significant concern to the Company is the fact that Kamran
Sattar and Portillion have invested approximately GBP2.7 million
and are interested in 40% of Daybreak Oil & Gas, with Reabold
holding a 42% interest. Given Mr. Sattar's significant interest in
Daybreak, the Board fears that Mr Sattar has a strong motive to
take control of Reabold in order to prioritise the Company's cash
resources towards Daybreak ahead of investments in West Newton and
Colle Santo, and making capital returns to Shareholders. Daybreak
is not a capital priority for the current Board, which the Board
believes is a source of frustration to Mr Sattar and Portillion.
Mr. Sattar has proposed, to the management of Reabold, that Reabold
acquires Mr Sattar and Portillion's interest in Daybreak.
"We continue to develop our portfolio of assets, and over the
next twelve months we expect to see progress towards the first
horizontal well at West Newton, the continued development of the
Colle Santo project in Italy, and the execution of capital returns
to Shareholders. Replacing the Board of Reabold with Proposed
Directors that do not possess the same level of experience and
understanding could significantly derail the development of these
assets at a crucial time for the Company and its shareholders."
Capitalised terms used herein but not otherwise defined shall
have the same meaning given to them in the Circular being posted to
shareholders today.
For further information, contact:
Reabold Resources plc c/o Camarco
Sachin Oza +44 (0) 20 3757
Stephen Williams 4980
Strand Hanson Limited - Nominated +44 (0) 20 7409
& Financial Adviser 3494
James Spinney
James Dance
Rob Patrick
Stifel Nicolaus Europe Limited +44 (0) 20 7710
- Joint Broker 7600
Callum Stewart
Simon Mensley
Ashton Clanfield
Cavendish - Joint Broker +44 (0) 20 7220
Barney Hayward 0500
Camarco
Billy Clegg
Rebecca Waterworth +44 (0) 20 3757
Sam Morris 4980
Notes to Editors
Reabold Resources plc has a diversified portfolio of
exploration, appraisal and development oil & gas projects.
Reabold's strategy is to invest in low-risk, near-term projects
which it considers to have significant valuation uplift potential,
with a clear monetisation plan, where receipt of such proceeds will
be returned to shareholders and re-invested into further growth
projects. This strategy is illustrated by the recent sale of the
undeveloped Victory gas field to Shell, the proceeds of which are
being returned to shareholders and re-invested.
LETTER FROM THE CHAIRMAN
REABOLD RESOURCES PLC
Directors: Registered Office:
Jeremy Samuel Edelman The Broadgate Tower
Michael Craig Felton 8(th) Floor
Marcos Estanislao Mozetic 20 Primrose Street
Sachin Sharad Oza London
Anthony John Samaha EC2A 2EW
Stephen Anthony Williams
13 December 2023
Dear Shareholder,
NOTICE OF REQUISITIONED GENERAL MEETING
The Board considers the Resolutions proposed by Pershing, on
behalf of the Requisitioning Shareholders, to be an opportunistic
attempt to gain control of YOUR company without paying a control
premium
The Board recommends Shareholders VOTE AGAINST ALL the
Resolutions at the General Meeting
1. Introduction
As announced by the Company on 22 November 2023, Reabold
received a requisition letter (the "Requisition Letter") from
Pershing Nominees Limited ("Pershing"), on behalf of Kamran Sattar,
Stephen Pycroft, Napsbury Holdings Ltd, Lagan Holdings Ltd, Brendan
Kerr, Michael Lagan, Kevin Lagan, John Patrick Keehan, Keltbray
Ltd, Majithia S, Sheikh B, Asim Sarwar and Roman Teslya (the
"Requisitioning Shareholders"), pursuant to section 303 of the
Companies Act, requesting the Board to convene a general meeting of
Shareholders.
The Resolutions to be put to Shareholders at the General Meeting
comprise the removal of all six of the existing Directors of the
Company, the removal of any director appointed to the Company
subsequent to the date of the Requisition Letter, and the
appointment of four new directors proposed by the Requisitioning
Shareholders.
The Board regrets to inform Shareholders that they will have to
engage with another Requisition procedure from Pershing, which it
considers unnecessary and vexatious in nature. These procedures
take up significant management time, as well as generating
significant unnecessary costs for Reabold. The focus of management
and the Directors should be on delivering value from the various
activities being undertaken by the Company, including, but not
limited to, the Rathlin funding/farmout process currently underway
with Hannam & Partners and its investment in LNEnergy.
Following several failed attempts, the Board believes that the
Requisitioning Shareholders are once again trying to gain control
of Reabold, its operational asset base and its cash, without
compensating Shareholders appropriately or paying a control
premium.
The Board also believes that the Proposed Directors are not
appropriate for the Company and include individuals with a track
record of value destruction as public company board directors in
some instances, or no public board experience that we are aware of.
Two of the Proposed Directors have potential conflicts of interest
with Reabold and the other two Proposed Directors were voted by
Shareholders not to be appointed to the Board at the last
requisitioned general meeting in November 2022.
The purpose of this letter is to provide Shareholders with
details of the Resolutions and to explain why the Board strongly
believes that these Resolutions are not in the best interests of
the Company. The Board unanimously recommends that you VOTE AGAINST
ALL the Resolutions.
PLEASE DO NOT ABSTAIN FROM VOTING - YOUR VOTE IS NEEDED
A statement from the Board of Reabold:
"Firstly, the Board would like to express its sincere regret
that, little more than one year on from the previous requisition
from Pershing Nominees Limited, Shareholders will once again have
to engage in a requisition of a general meeting. The Board
considers certain of the Requisitioning Shareholders' actions to be
unprofessional and condemns the decision to drag the Company into
another proxy battle for the personal interests of a small number
of individuals.
"The Board believes that the current management team is
delivering on its strategy, with the Company currently holding
significant stakes in two of the largest onshore undeveloped gas
discoveries in Western Europe and remains focused on developing
Western gas assets in response to the European gas crisis. Since
the Company's restructuring in 2017, the management team has built
a substantial portfolio of upstream assets with highly active
drilling operations relative to other small cap oil and gas
companies.
"The Board is unanimous in its view that the Requisitioning
Shareholders are, once again, trying to gain control of Reabold,
its operational asset base and its cash, without paying a control
premium. In March this year, one of the Proposed Directors, Kamran
Sattar, via Portillion, made an unsolicited indicative offer for
the Company, which was deliberately leaked by Mr. Sattar via a
media outlet prior to approaching the Company. Portillion did not
make a firm offer for the Company and therefore brought no value to
Shareholders; rather it consumed management's time and the
Company's cash resources dealing with the regulatory implications
and workstreams.
"It is the Board's view that this leaked expression of interest
clearly shows that Mr. Sattar sees the intrinsic value of the
Company and its assets, but does not possess either the desire or
the means to make a firm offer to acquire Reabold and seemingly did
not seek appropriate professional advice in relation to the matter.
In line with the key fiduciary responsibility of the Board, we
would of course engage in any discussion regarding a reasonable and
bone fide offer for the Company, but the Board does not intend to
cede control without ALL Shareholders being compensated
appropriately and the bidder going through the proper process to
make a realistic offer for the Company at a recommendable
premium.
"The Board believes the motives of the Requisitioning
Shareholders cannot be trusted and that the timing of the
Requisition Letter is not coincidental; it is in fact
opportunistic. The first requisition coincided with the first
tranche payment due from Shell for the sale of Corallian. This
second requisition coincides with the subsequent GBP5.2 million
received from Shell on 5 December 2023 and GBP4.4 million expected
in the coming months. The timing is such that the Proposed
Directors would be in control of a well-funded company should the
Resolutions be duly passed, and the Board strongly believes that
the Requisitioning Shareholders and Proposed Directors are using
this requisitioned general meeting as a way of attempting to take
control of your Company, your cash and your assets.
"The Board has serious concerns about all four Proposed
Directors, which include individuals with a track record of
significant value destruction as public company board directors in
some instances, or no public board experience that we are aware of.
Additionally, two of the Proposed Directors' appointments were
voted down by Shareholders at the last requisitioned general
meeting in November 2022. Two of the Proposed Directors currently
sit on the board of Zenith Energy - a competitor to Reabold, which
poses a potential conflict of interest which may result in
operational, governance and regulatory issues should such Proposed
Directors be appointed to the Board.
"Should the Requisitioning Shareholders be successful in
removing the entire existing Board, which is currently compliant
with the QCA Code's guidelines, the corporate governance standards
of Reabold would be jeopardised.
"Once again, the Requisitioning Shareholders have not proposed a
coherent, alternative strategy for Reabold and its assets. The
Board disputes the notion that the Proposed Directors possess a
better understanding of, and better relationships with, key
stakeholders critical to the successful implementation of the
Company's business strategy.
"The Board believes that the Proposed Directors are acting in a
self-serving manner by trying to extract value from Shareholders
and are not acting in the best interest of all Shareholders of
Reabold. If the Requisitioning Shareholders or Zenith Energy want
to gain control of your Company, they need to compensate
Shareholders appropriately and pay a control premium. The Board
would seriously consider any proposal which is credible and funded,
at an appropriate valuation, in-line with its statutory and
fiduciary duties."
The Board recommends that Shareholders VOTE AGAINST ALL
Resolutions at the General Meeting
The Board believes that the Resolutions being proposed at the
General Meeting, requisitioned by Pershing on behalf of the
Requisitioning Shareholders, are NOT in the best interests of the
Company and Shareholders as a whole and unanimously recommends that
you VOTE AGAINST ALL of the Resolutions at the General Meeting.
2. Reasons why the Board recommends you to VOTE AGAINST ALL the Resolutions
a. The Requisitioning Shareholders are, once again, attempting
to gain control of Reabold, its operational asset base and its
cash, without paying a control premium.
In-line with its duties, the Board would consider any reasonable
bona fide offer for the Company by the Requisitioning Shareholders,
but the Board will not cede control of the Company without ALL
Shareholders being compensated appropriately and being paid a
control premium. The Board believes that the timing of this action
is opportunistically linked to the GBP5.2 million second cash
payment from Shell, received on 5 December 2023, and the third cash
payment of GBP4.4 million that is expected in the coming months
from the sale of the Company's Corallian assets to Shell, such that
the Proposed Directors would be in control of a well-funded
Company, should the Resolutions be duly passed.
On 26 October 2023, Kamran Sattar enquired of the Board when the
deadline for the incoming Shell payment was; eight days later, the
Company learnt that a draft of the Requisition Letter had been
leaked to the media by Mr. Sattar, albeit the Company notes that
the notice was itself deficient and required significant revision
prior to being resubmitted.
Kamran Sattar and Portillion have invested approximately GBP2.7
million and are interested in 40% of Daybreak Oil & Gas, with
Reabold holding a 42% interest. Given Mr. Sattar's significant
interest in Daybreak, the Board fears that Mr Sattar has a strong
motive to take control of Reabold in order to prioritise the
Company's cash resources towards Daybreak ahead of investments in
West Newton and Colle Santo, and making capital returns to
Shareholders. Daybreak is not a capital priority for the current
Board, which the Board believes is a source of frustration to Mr
Sattar and Portillion. Mr. Sattar had previously proposed, to the
management of Reabold, that Reabold acquires Mr Sattar and
Portillion's interest in Daybreak.
b. The Board believes that the motives of the Requisitioning
Shareholders cannot be trusted and the Board has multiple examples
of Kamran Sattar attempting to extract value from Shareholders for
self-serving gains:
i) On 20 April 2023, Mr. Sattar contacted the Company with a
proposal to procure the sale of certain web domains, which included
website addresses bearing Reabold's name and the website he had set
up for the first requisition attempt, to the Company for
GBP100,000. Mr. Sattar claimed that this sum represented the costs
incurred by him for the previous requisition. The Company did not
engage in what it considered to be an irresponsible use of
Reabold's cash resources. Mr. Sattar then followed up with a
much-reduced offer of "GBP20,000 - GBP25,000", on 12 October 2023
and a further revised offer of GBP30,000 on 20 October 2023 (see
also paragraph 2 g below). The Company declined this offer from Mr.
Sattar and a previous undated invalid requisition letter was leaked
to the media on 3 November 2023.
ii) In March 2023, four months after failing to pass any of the
proposed resolutions at the requisitioned general meeting in
November 2022, Kamran Sattar made an unsolicited, indicative offer
for the Company on behalf of Portillion SPV O&G, which was
initially leaked by Mr. Sattar to the media (along with materially
misleading statements about the terms of the offer and its status)
before approaching the Company. The Company was obliged to make an
announcement pursuant to the Takeover Code, thereby commencing an
offer period and had to allocate significant resources, including
cash, to comply with all applicable regulatory and legislative
requirements.
Portillion's leaked possible offer was not supported by any
meaningful engagement, save for a rudimentary email and the Board
believes that the approach was not made following a diligent and
prudent process. The possible offer subsequently received was
proposed to be at a 10% premium to Reabold's prevailing share
price, which the Board considered to materially undervalue the
Company's investment portfolio and business as a whole.
The act of leaking such information regarding a potential bid
for a company subject to the Takeover Code is in contravention of
the strict confidentiality provisions set out in the Takeover Code.
The unprofessional nature of these actions is compounded by the
fact that misleading information about the possible offer price and
the status of the possible offer was leaked to media outlets. The
Board notes that such behaviour may constitute a potential breach
of the UK Market Abuse Regulation, which prohibits certain
activities that comprise market manipulation (in particular the
dissemination of false or misleading information).
Portillion confirmed that it did not intend to make a firm offer
28 days later. It is the Board's view that this early stage and
under-prepared expression of interest shows that Mr. Sattar sees
the intrinsic value of the Company and its assets, but does not
possess either the desire or the means to make a firm offer. The
Board considers this Requisition to represent yet another attempt
to gain control of the Company without paying a premium.
c. The Requisitioning Shareholders have conducted themselves in
a manner that the Board considers to be unprofessional, and the
Board condemns the decision to force the Company to commit further
valuable resources to yet another disorganised proxy battle.
The Board deeply regrets to inform Shareholders that they will
have to engage with another disorganised proxy attack from the
Requisitioning Shareholders. As a professionally run public
company, Reabold does not want to be involved in another "soap
opera" proxy battle of this nature, which will be a serious
distraction from the Company's strategy. The unprofessional nature
of the requisition is evidenced by the actions of the
Requisitioning Shareholders to date, including:
-- the leaking of a draft invalid requisition notice to the
media and internet message boards on 3 November 2023, prior to it
being sent to the Company, which required the Company to make an
announcement in response to media speculation and confirming that
the Company had not received any form of communication from, or on
behalf of, the Requisitioning Shareholders with regard to a
requisition;
-- the Requisitioning Shareholders sending an invalid
requisition notice to the Company by email on 7 November 2023,
which was materially deficient and therefore invalid (see the
Company's announcement of 14 November 2023);
-- the Requisitioning Shareholders eventually delivering the
Requisition Letter after business hours on 21 November 2023
(despite the letter being dated 15 November 2023) which contained
materially different resolutions to those contained in the invalid
requisition notice of 7 November 2023; and
-- the apparent dissemination of false or misleading information
about the Company, its assets and the Requisition on internet
message boards by users that claim to be in direct dialogue with
Kamran Sattar.
The Board and the Company's advisers are currently reviewing the
nature of the media and internet leaks to date (and similar other
actions by certain of the Requisitioning Shareholders, such as that
detailed in paragraph 2 b ii) above). The Board is concerned that
these actions are not only inappropriate from certain individuals
purporting to be suitable directors of an AIM-quoted company but
that they may also constitute market abuse.
The amateurism is typical of the Requisitioning Shareholders'
approaches to Reabold and the Board believes it has resulted in
certain institutional Shareholders exiting their position in the
Company, who consider the approach taken by the Requisitioning
Shareholders to be below the standards of business within which
they operate.
Kamran Sattar has attempted shareholder activism before and
deployed similar tactics. The Board notes the announcement made by
Bushveld Minerals Limited on 10 October 2023, stating that there
had been market speculation regarding Kamran Sattar and
Portillion's intention to call a general meeting of shareholders in
order to effect boardroom changes; however, Mr. Sattar subsequently
confirmed in writing that he no longer intended to requisition a
general meeting. The Board considers this to demonstrate the lack
of coherence in Mr. Sattar's approach to shareholder activism,
which Reabold has also had to contend with. His disregard for
confidentiality and public market conduct through his activist
approaches, which have repeatedly been leaked through media outlets
and internet message boards, is a major cause for concern.
The Board notes that both Portillion and Kamran Sattar are
regulated by the Financial Conduct Authority and is therefore
astounded at the unprofessional approach to these serious matters
relating to market conduct, some of which impact directly on
shareholder value, where many of these campaigns seem to be carried
out without appropriate professional advice.
d. The Board believes this second requisition for a general
meeting is vexatious in nature and serves only to disrupt and
impede the Board and Reabold.
The Board believes that the second requisition procedure is
motivated by the Requisitioning Shareholders' desire to derive
personal benefits, gain publicity for themselves and create a
nuisance for the Board. The unsuccessful requisition of November
2022 was a serious and costly distraction for the Company and its
Shareholders . The Company will again be forced to commit
significant time and resources to managing the proxy battle, which
could instead be deployed to further deliver on the Company's
growth strategy.
The Requisition Letter is inflammatory and contains
unsubstantiated and false allegations throughout, which the Board
responds to in full below.
e. The Board finds it concerning that the Requisitioning
Shareholders have not proposed a clear strategy for Reabold and its
assets.
The Requisitioning Shareholders have not proposed a coherent,
alternative strategy to run the Company. The Board would like to
flag that, in the Requisition Letter, the Proposed Directors plan
to recommend that GBP3 million be returned to Shareholders if the
requisition is successful. Reabold has already stated its intention
to distribute GBP4 million to Shareholders now that it has received
the second tranche of funds from Shell, the mechanism of which is
to be determined upon consultation with Shareholders. The Board
questions the intent behind the Requisitioning Shareholders'
actions and believes that the group wishes to take control of the
Company as the further tranches of cash arrive from the sale of
Corallian to Shell.
The Board's strategy is to replicate its success with Corallian
and make considerable further distributions from future
monetisation events to return cash to Shareholders.
f. The Board is concerned that there is a potential conflict of
interest with respect to the proposed CEO, Andrea Cattaneo (who is
the current CEO & President of Zenith Energy) and another
Proposed Director, José Ramón López-Portillo Romano (the current
Chairman of Zenith Energy). Zenith Energy is listed on the Main
Market of the London Stock Exchange and is a competitor of
Reabold.
Andrea Cattaneo is currently CEO & President and sits on the
board of Zenith Energy, a competitor company to Reabold and a
company in which Mr Cattaneo is a significant shareholder
(according to Zenith's most recent annual report). The Board sees
this as a potential conflict of interest which could result in
regulatory and governance issues. There has not been any
announcement from Zenith communicating that Mr. Cattaneo is
stepping down or looking for an alternative role.
The Board therefore fails to understand how the Requisitioning
Shareholders' proposed CEO will be able to devote sufficient time
to Reabold whilst also acting as CEO for Zenith Energy. The Board
considers this particularly perplexing given that the
Requisitioning Shareholders have explicitly stated that "it is
unfathomable the executives can devote sufficient time to the
Company whilst having directorship commitments for numerous other
companies," whilst the only directorship roles that Mr. Oza and Mr.
Williams hold are non-executive and on the boards of Reabold's
investee companies. The Board also notes that the voting guidelines
from proxy advisers ISS and Glass Lewis in relation to
"overboarding" - i.e. the concept that directors should not serve
on too many listed company boards - recommend a maximum number of
five board mandates. Under those guidelines, executive director
roles count as triple mandates and, therefore, if elected to
Reabold's Board as CEO, Mr Cattaneo would hold the equivalent of
six mandates.
Mr. Romano currently also sits on the board of Zenith Energy,
which represents another conflict of interest and potential
corporate governance issues. He has acted as Zenith's Chairman
since 2017.
Furthermore, the Board's concern about potential conflicts of
interest in relation to Mr. Cattaneo and Mr. Romano (who are the
two most senior officers on the Board of Zenith) is not merely
theoretical. Zenith has previously made an offer to acquire a
substantial interest in Daybreak Oil and Gas and, although a
transaction was never executed, the Board believes this puts the
motives of the Requisitioning Shareholders into question,
suggesting that they want to gain control of Reabold's assets
without paying a control premium.
Zenith's share price has depreciated over 65% year-to-date to
3.20p and has seen value destruction of 97% since the company
listed on the London Stock Exchange in 2017 at a price of 101.25p,
under Mr. Cattaneo and Mr. Romano's leadership.
g. The Requisitioning Shareholders state that they are
dissatisfied with the Company's strategy, yet in previous
communications with the Company, Kamran Sattar communicated his
alignment with the strategy, and his desire to publish a joint
statement of support for the Board on 12 October 2023.
In a meeting between Kamran Sattar, Stephen Williams and Sachin
Oza on 12 October 2023, Mr. Sattar stated his support for the
Company's strategy and, un-prompted, expressed his willingness to
support Reabold's management and cooperate with the Company. He
stated: "If we want, I will be happy to make a statement. I think
it's potentially time to do so if we can jointly just put to rest
or at ease [ Shareholders ] that Portillion are supporting Reabold
and are happy to support management at Reabold, and not looking to
do any requisition or takeover of the business, after speaking with
the board [we are] supportive."
Following that meeting, the Company and its retained PR advisers
prepared a draft joint statement which the Company sent to Mr.
Sattar on 20 October 2023 for his review and comment. Mr. Sattar
replied on the same day and stated that any joint statement would
be subject to the Company "covering our costs and website of
GBP30,000". The Company did not accept those conditions.
The Board is concerned that Mr. Sattar's inconsistent messaging
and vacillating support for Reabold's strategy represents a more
general lack of reliability and coherence and is further evidence
of a lack of professionalism and credibility. It is also telling
that the Requisition was submitted shortly after Reabold declined
to make payments to Portillion in exchange for websites bearing the
Company's name.
h. The Board believes the Requisitioning Shareholders have
proved that they are not aligned with ALL Shareholders and has
evidence that they want control of the Company and its assets and
are acting in self-serving manner.
As a reminder to Shareholders, in October 2022, certain of the
Requisitioning Shareholders attempted to gain control of the
Corallian North Sea exploration assets which Reabold bought for
GBP250,000. Kamran Sattar and Cathal Friel offered Corallian
GBP500,000 after an agreement had already been entered into with
Reabold.
They also tried to reduce the conversion price of convertible
loan notes that were issued to the group from GBP3.20 to GBP1.50
which would have been to the detriment of ALL other Reabold
Shareholders by devaluing the sale of Corallian to Shell. The Board
believes that the relationship established with Shell will be
beneficial to the Company in the medium to long term due to future
potential transactions and that the last-minute convertible loan
note changes, proposed by Portillion, potentially undermined
Reabold's reputation as a creditable counterparty in the
industry.
i. Should the Requisitioning Shareholders be successful in
removing the entire existing Board, which is currently compliant
with the QCA Code's guidelines, the corporate governance standards
of Reabold would be jeopardised.
Mr. Andrea Cattaneo is the CEO and President of Zenith and has
been proposed by the Requisitioning Shareholders to also be the CEO
of Reabold. The nominated CEO holding another CEO role at a
competitor is a clear governance failing. Not only does this mean
that his external time commitments would be very demanding, but he
could not possibly be acting in the best interests of Reabold while
serving as an executive director of a competitor. The Board also
notes that, for the purposes of the ISS and Glass Lewis
overboarding guidelines, Mr Cattaneo would hold the equivalent of
six board mandates against the recommended maximum of five
mandates. The fact that two of the Proposed Directors are also on
the Board of Zenith Energy compromises their independence,
particularly as Zenith is a competitor of Reabold and it is not
clear what their intentions are in relation to the two
companies.
It should also be noted that a significant conflict of interest
would arise should Kamran Sattar be appointed to the Board as he
represents the other major shareholder in Daybreak where his
investment company, Portillion and Kamran Sattar personally, have a
40% holding. As a result, he may be conflicted and could
potentially have competing interests to those of the Shareholders.
The Board considers this unacceptable.
The Board reminds Shareholders that two of the Proposed
Directors were previously proposed to be appointed to the Board in
November 2022 at a requisitioned general meeting, however
Shareholders voted not to elect Francesca Yardley and Kamran Sattar
to the Board by a majority of 75.19% and 75.20%, respectively. The
relationship the Requisitioning Shareholders have with Ms Yardley
is not clear and it is possible that, if each of the nominees are
elected, the Board could have insufficient independence and thus
breach the QCA Code.
We also note that the Board has been unable to find any UK
public company director experience for Mr. Sattar or Ms.
Yardley.
The existing Board comprises two executive directors and four
non-executive directors, two of which are considered to be
independent, which provides the Company with a balanced board, a
strong level of independence and appropriate executive function,
which is supported by a non-board level Chief Financial Officer.
Indeed, the Board is committed to achieving high levels of
corporate governance as set out in detail in its annual corporate
governance statement which is available on the Company's
website.
Should all the Resolutions be duly passed, the Board expects
that Reabold's standards of corporate governance would be hampered.
The Company currently complies with the QCA Code's 10 principles
which assign great responsibilities to the board of directors. The
QCA Code contains a list of requirements, including that a board
should have a clear view on a company's purpose and strategy, that
a board understands the needs of its stakeholders, that a board
identify risks facing the company, and that a board be comprised of
at least two independent non-executive directors. The Company's
governance structure could be harmed if the proposed Resolutions
are passed, and we do not believe that this is in the best interest
of the Company or its Shareholders.
3. Why the criticism of the Board by the Requisitioning
Shareholders should be dismissed out of hand.
In various letters and exclusive press briefings, the Board
notes a plethora of criticism and allegations by the Requisitioning
Shareholders and Proposed Directors. Set out as follows is the
Board's response to various of these allegations.
Allegation
"The Requisitioning Shareholders are dissatisfied by the
announced sale of Corallian, having expected a significantly higher
valuation to be achieved based on a previously stated valuation of
Corallian of GBP190 million."
Response
Corallian was sold for GBP32.0 million which was significantly
above book value, with GBP12.7 million net to Reabold. Reabold
acquired Corallian's remaining six licences for a total
consideration of GBP250,000, whilst it invested only GBP7.5 million
(net) across the entire Corallian portfolio. Reabold never guided
to a sale price for Corallian, and to talk about expectations of a
higher price is considered to be misleading.
The sale of Corallian was achieved as a result of an extremely
thorough process run over several months which tested the market,
and the best offer was accepted and subsequently the deal
successfully executed. According to the Company's analysis, the
sale price is more than 50% higher than trading values of North Sea
peer companies with similar undeveloped assets, and c.30% higher
than comparable North Sea transactions for undeveloped assets. This
was despite selling into a crowded market, with many competing
asset packages for sale in the North Sea.
The Corallian sale is proof of the business model and strategy,
achieving monetisation of investments, giving the Company financial
flexibility to make a distribution to Shareholders and progress the
strategy from a re-capitalised footing, which is now being
disrupted by another general meeting requisition.
Certain of the Requisitioning Shareholders attempted to prevent
Reabold retaining ownership of the six non-Victory Corallian
licences and even attempted to circumvent Reabold acquiring these
assets by offering GBP500,000 (a 100% premium to the acquisition
price achieved by your Board) to Corallian for the assets. This
would have deprived Shareholders of the value we expect to create
from these assets.
Allegation
"The Requisitioning Shareholders are dissatisfied by the
performance and time taken at West Newton; its valuation accretion
has only occurred because of current energy prices."
Response
The Company continues to make meaningful progress at West
Newton.
The Environmental Agency permit for the use of oil-based
drilling fluids at the West Newton B-2 well was approved on 27
September 2023 and a horizontal well is planned for H1 2024.
Reabold is fully funded for its share of the next West Newton
well.
There has been substantial progress at West Newton since Reabold
invested in November 2018, including:
-- Two wells drilled;
-- Gross 2C unrisked recoverable resource of 197.6 bcf of sales
gas at an 86% geological chance of success underpinning the strong
commercial and economic case for West Newton;
-- CPR estimates a prospective resource of 363.7 bcf of sales
gas at a 43% geological chance of success;
-- Extensive work done by, inter alia, Applied Petroleum
Technology, CoreLab N.V. and RPS Group to:
o Model flow potential from West Newton wells; and
o Inform the drilling and completion method to achieve good well
productivity;
-- Engagement with various regulatory bodies including securing
planning permission for drilling further wells at West Newton.
Allegation
"The view of the requisitioning shareholders is that the
regulatory/administrative route in relation to the Colle Santo
project is very complicated - the first development plan was
rejected and the operator has been waiting for the production
concession since 2009. In addition, the proximity to the "Bomba"
lake dam makes the Colle Santo project potentially sensitive in
terms of public safety."
Response
The Board welcomes the opportunity to put the record straight
with regards to the Colle Santo project, which has already seen
significant progress with its approval process.
On 5 September 2023, the Abruzzo regional government confirmed
its agreement with, and intention to approve, by decree, the Early
Production Programme for the Colle Santo gas field, allowing early
revenue generation from the Colle Santo project. LNEnergy, a
company in which Reabold holds a 26.1% interest, signed a letter of
Intent with a major Italian Engineering, Procurement and
Construction ("EPC") company, Italfluid, for a micro-LNG plant in
Italy, which would result in a significant reduction in upfront
capex to get the field to production.
The Colle Santo project is particularly exciting for Reabold
because:
-- It has minimal sub-surface risk, and is development ready
with no additional drilling required;
-- The regulatory landscape is clearly changing in Italy, and
verbal confirmation has been received from the regional government
for an early production system;
-- The project is valuable for energy security and the energy
transition in Italy, which is increasingly driving the national
government's agenda;
-- Reabold enjoys an excellent relationship with the important
Italian EPC company, Italfluid, which is acting as contract
operator for the whole project; and
-- LNEnergy believes that the field has the potential to
generate an estimated EUR11-12m of gross post-tax free cash flow
per annum.
The first development plan rejected in 2021 is very different to
the new development plan submitted by LNEnergy for the development
of the project, with a significant reduction in footprint relative
to the original proposal submitted by Forest Oil. The revised Colle
Santo project concept includes:
-- Focus on micro-LNG, a transition fuel which has a central
role in the EU's net zero energy plan;
-- Production of only two existing wells with no further
drilling; the previous development plan had up to five wells;
-- Reduction of natural gas extraction below 50%, with only
40,800 LNG tons/year; the previous development plan projected gas
production of 650,000 Smc/d maximum;
-- No construction of a 21 km natural gas pipeline from the
Municipality of Bomba to the Industrial Park of Atessa pipeline as
previously planned, and no connection to the SNAM network;
-- Liquefied gas delivered by road transport limited to 6-7 tankers per day;
-- On-site CO(2) capture and liquefaction; g as produced will be
converted to micro-LNG directly onsite using a small modular
micro-LNG processing unit; and
-- Emissions halved compared to the previous project proposal.
On 1 December 2023, the Italian Government approved a decree to
boost the country's renewable energy production and energy security
at the meeting of the Council of Ministers held on 27 November
2023. The decree provided incentives to build plants for energy
production from renewable sources, such as the liquefaction of
natural gas; the release of new licences for the exploitation of
gas fields aimed at providing gas to industries with high gas
consumption, at competitive prices; incentives for LNG terminals
and incentives for carbon dioxide storage programmes. Given the
focus on micro-LNG in the new development plan submitted by
LNEnergy, the Board believes that the regulatory environment in
Italy for the approval of the Colle Santo project is looking
increasingly promising.
Allegation
"The Requisitioning Shareholders are dissatisfied by the
Company's Board having failed to capitalise on the downtrend in oil
prices to acquire any producing assets to secure the future of the
business."
Response
Buying and operating producing assets is not part of the
Company's strategy nor investing policy, which has been
continuously articulated to and supported by Shareholders. The
Board does not know if acquiring producing assets would be part of
the strategy of the Requisitioning Shareholders, as they have not
set out a clear strategy for Reabold and its assets.
Allegation
"Each Co-CEO was paid an annual fee of GBP242k and a bonus of
GBP50k in 2022, and an annual fee of GBP231k and a bonus of GBP50k
in 2021. Meanwhile the loss for the year (before foreign exchange
realisations) was GBP45k in 2022, GBP2.675 in 2021 and 2.668m in
2020."
Response
This is inaccurate.
The GBP242,000 figure refers to salary and pension. Both the
Co-CEOs were paid a salary of GBP231,000 in 2021 and 2022 and were
not paid a bonus. The last bonus that was paid related to the
Company's performance in 2020. Neither Co-CEO has received a bonus
for either the 2021 or 2022 performance year. Please see below an
extract and notes from remuneration report from the Company's 2022
annual report below:
Executive Directors' pay for the year ended 31 December 2022
Sachin Stephen Anthony Sachin Stephen Anthony
Oza Williams Samaha(b) Oza Williams Samaha
Co-CEO Co-CEO FD Co-CEO Co-CEO FD
2022 2022 2022 2021 2021 2021
------------------- ----------- ----------- ----------- ----------- ----------- ----------
Salary GBP230,875 GBP230,875 GBP50,000 GBP230,875 GBP230,875 GBP73,333
Annual bonus(a) Nil Nil Nil GBP50,000 GBP50,000 Nil
Benefits Nil Nil Nil Nil Nil Nil
Pension GBP11,419 GBP11,419 GBP1,250 GBP11,419 GBP11,419 Nil
Performance shares Nil Nil Nil Nil Nil Nil
------------------- ----------- ----------- ----------- ----------- ----------- ----------
Total remuneration GBP242,294 GBP242,294 GBP51,250 GBP292,294 GBP292,294 GBP73,333
Notes:
(a) The annual bonus paid in 2021 related to the 2020
performance year. From 2022, annual bonuses are accrued in the year
in which they are earned.
(b) Anthony Samaha resigned as finance director on 30 June
2022
Sachin Oza's and Stephen Williams' salaries were not increased
in 2022. No bonuses were awarded for either the 2022 or 2021
performance year (see note a above). The Directors receive no
benefits from the Company apart from the pension contributions
shown in the table above and the directors are not paid by any
investee company where they sit on the board as a Reabold
representative. The Directors have never been awarded Ordinary
Shares as part of share option plans.
Reabold's total general and administrative expenses for the 2022
financial year was GBP1.7 million which is below the average of its
peers.
Regarding executive remuneration, Reabold has a remuneration
committee chaired by a senior independent non-executive Director in
line with the QCA Corporate Governance Code. All remuneration
payable to Directors is decided by the remuneration committee. In
2023, the committee engaged with BDO LLP to design the Company's
incentive package, which includes share options and bonuses. Share
option plans do not pay unless targets are met, and base salaries
were benchmarked by the Company's remuneration committee in 2021.
The executive Directors did not take a pay rise in 2022 despite the
inflationary environment.
Reabold's executive team's remuneration is comparatively lower
than peers of similar market capitalisation, as demonstrated
below:
Company Reabold Sound Deltic Union United Challenger
market capitalisation GBP11.1m Energy Energy Jack Oil Oil & Gas Energy
plc plc plc plc Group plc
GBP15.2m GBP20.7m GBP21.0m GBP4.1m GBP12.1m
Executive
Team Remuneration
2022 GBP535,838 GBP1,090,000 GBP905,190 GBP407,083 $833,209 $800,000
------------ -------------- ------------ ------------ ----------- -----------
Allegation
"an example showing the failure of the Company's current
management and their strategy is the Daybreak Oil & Gas
transaction for which Kamran Sattar and his group brought two
lucrative offers but the Company's management were unaware of these
offers despite having a board representative for the Company's
interest."
Response
Reabold is aware that the party that made offers to invest in
Daybreak Oil and Gas was Zenith.
Reabold management met with Andrea of Zenith on three occasions
prior to the offers made by Zenith to invest in Daybreak notably
the written offer on 7 June 2023. These meetings were on 27 April,
30 May and 2 June 2023. Reabold management attempted to follow up
on Zenith's interest in Daybreak on 26 July and 1 August 2023, but
received no intent to engage.
Reabold, through its significant equity holding, would be
supportive of any genuinely value accretive transaction involving
Daybreak.
The Board also wishes to correct the false statement that
Reabold has a board representative on the board of Daybreak. There
is no representative from Reabold on the board of Daybreak, a point
that had been repeatedly made to Kamran Sattar during a meeting on
12 October 2023.
Allegation
"The reason why hardly any other companies divide this role is
because of the need for clear leadership, which the Company is
devoid of."
Response
The management team consists of only three people (two Co-CEOs
and a CFO) and through these three positions, all functions of the
business are covered.
Sachin Oza and Stephen Williams provide complimentary and broad
skill sets ranging across technical understanding of the asset
base, business development, M&A, financial management, strategy
and stakeholder engagement, as well as the day to day running of
the business.
A number of similar public companies have larger management
teams carrying out these activities, whilst Reabold has always
maintained a focus on being as lean as possible, only taking on a
full time CFO last year.
Managing an asset base like the one within the Reabold
portfolio, as well as driving forward new investments and projects,
requires a significant amount of skill, experience and effort. The
Board considers the team to match these demanding requirements.
The fact that Sachin and Stephen both have the title of Co-CEO
reflects the collaborative nature of decision making within
Reabold. Out of this comes the innovative approach that Reabold has
taken to building a business, and a huge amount has been achieved
in a relatively short period of time.
Allegation
"Stephen Williams holds external directorships unrelated to the
Company...it is unfathomable the executives can devote sufficient
time to the Company whilst having directorship commitments for
numerous other companies."
Response
The Board disputes the validity of this statement. Stephen
Williams does not hold external directorships unrelated to the
Company.
The Board would like to point out that, with associate or
investee companies, it is standard practice to have executives
stand as a director, to provide critical influence over decision
making and investments, to protect Reabold's interests. The board
believes that Shareholders would expect such representation.
The Board does not believe that these are conflicting interests,
as Sachin Oza and Stephen Williams are on these boards as Reabold's
representatives, which is a key aspect of the oversight Reabold
maintains on its investments.
Stephen Williams is a director of Rathlin Energy (UK) Limited
and Sachin Oza of Danube Petroleum Limited and in both cases, they
declined to take a director fee. The modest fees that are payable
by Rathlin and Danube (which are in line with the fees paid to the
other directors of those companies) in respect of these board
positions are paid to Reabold and not to the individuals.
The Board is concerned at the apparent lack of understanding
that the Requisitioning Shareholders have demonstrated over the
Company they are proposing to take control of.
The Board would like to point out the contradictory nature of
the Requisitioning Shareholders' statement above, noting that the
Requisitioning Shareholders' proposed CEO is the CEO &
President of another listed company, Zenith Energy, and one of the
other proposed directors is currently Chairman of that same
company, a competitor of Reabold.
Allegation
"Since 2 Jan 2023 the Company's share price, and ultimately its
market capitalisation, has deteriorated from GBP0.064".
Response
Since 2 January 2023, Reabold's share price performance has been
in line with the FTSE AIM All-Share Energy index, despite the
Company's shares currently trading at a 74% discount to NAV, as at
the Last Practicable Date.
The Board believes the value of the Company will be realised in
time, but the recent share price performance is a frustration for
the management team. The Board is working hard to address this in
terms of more regular communications with Shareholders and
engagement with advisors.
The Board continues to be disappointed with the disconnect
between the Company's share price and the net asset value of the
Company and believes that the net asset value of the Company will
grow as it continues to implement its strategy.
The Company embarked on a share buyback programme, in April
2023, in part, to acknowledge the NAV to share price gap and
address Reabold's share price performance.
Allegation
"[Strategy should be to] align senior management positions with
stakeholders by the appointment of directors who have meaningful
stakes in the Company"
Response
The Directors of Reabold own a combined total of 3.22% of the
Company. In contrast, Kamran Sattar holds an interest of 1.63%. As
Directors of the Company, management review and consider buying
opportunities on a regular basis.
4. Action to be taken by Shareholders
Shareholders will find enclosed with this letter a Form of Proxy
for use at the General Meeting. The Form of Proxy should be
completed and returned in accordance with the instructions printed
on it so as to arrive at Neville Registrars Limited, by email to
info@nevilleregistrars.co.uk, by post or by hand (during normal
business hours and by appointment only) at the following address:
Neville Registrars Limited, Neville House, Steelpark Road,
Halesowen B62 8HD as soon as possible and in any event not later
than 10:00 a.m. on 8 January 2024.
Shareholders who hold their shares through CREST and who wish to
appoint a proxy for the General Meeting or any adjournment(s)
thereof may do so by using the CREST proxy voting service in
accordance with the procedures set out in the CREST manual. CREST
personal members or other CREST sponsored members, and those CREST
members who have appointed a voting service provider, should refer
to that CREST sponsor or voting service provider(s), who will be
able to take the appropriate action on their behalf. Proxies
submitted via CREST must be received by the Registrar (ID: 7RA11)
by not later than 10:00 a.m. on 8 January 2024.
5. Recommendation
The Board Recommends Shareholders VOTE AGAINST ALL Resolutions
at the General Meeting
For the reasons noted above, the Board unanimously consider that
the Resolutions are not in the best interests of the Company. The
Directors will be voting against the Resolutions in respect of
their own beneficial holdings. The Directors hold 334,204,685
Ordinary Shares in aggregate, representing approximately 3.22% of
the issued share capital of the Company as at the Last Practicable
Date. The Board therefore strongly recommends that Shareholders
VOTE AGAINST ALL the Resolutions being proposed at the General
Meeting.
6. Due diligence on Proposed Directors
Any appointments to the board of an AIM company are subject to
the satisfactory completion of regulatory due diligence and
appropriateness checks by the Company's Nominated Adviser, which
require the provision of relevant documentation from any proposed
director. None of the Proposed Directors put forward as part of the
Requisition has yet been subject to full due diligence, or been
approved by Strand Hanson, the Company's Nominated Adviser. Strand
Hanson has commenced this process in line with its requirements
under the AIM Rules for Companies and the AIM Rules for Nominated
Advisers. Strand Hanson has not yet received from the Proposed
Directors all the requisite information required to undertake its
due diligence process.
Should the outstanding information requested from the Proposed
Directors not be provided within a sufficient period to allow
Strand Hanson to make an informed assessment of the proposed
appointees by the time of the General Meeting, including engaging
external third party due diligence reports to be commissioned (as
required), or should Strand Hanson determine that any of the
Proposed Directors are not suitable to act as directors of the
Company, Strand Hanson may be forced to consider its position as
nominated adviser to the Company. In the event that Strand Hanson
were to resign as nominated adviser, the Company's ordinary shares
would be suspended from trading immediately and, in accordance with
AIM Rule 1, the Company would then have one month to replace Strand
Hanson as nominated adviser, failing which the Company's admission
to trading on AIM would be cancelled.
Yours faithfully
Jeremy Edelman
Chairman
For any shareholder questions to the Company in relation to the
information in this document, please use the following contact
details:
Telephone: +44 (0) 20 3781 8331
Email: reabold@camarco.co.uk
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END
CIRUUAUROBUUAUA
(END) Dow Jones Newswires
December 13, 2023 02:00 ET (07:00 GMT)
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