The Board of Directors of Britain's JKX Oil&Gas oil and gas company with assets in Ukraine and Russia has suggested that shareholders not support an initiative to replace top managers put forward by Eclairs Group, owned by the co-owners of PrivatBank Ihor Kolomoisky and Hennadiy Boholiubov and supported by Glengary Overseas Limited of businessman Alexander Zhukov.
"The Board of JKX considers that the collaborating parties are acting only in their own interests and not in the interests of all shareholders," reads a letter of the board to the shareholder published on Wednesday.
According to the board, the collaborating parties’ desire to destabilize JKX at a key juncture in the progress of the company is an opportunistic attempt to secure control of its assets and the benefits of action taken by the board without paying any premium to other shareholders.
The board drew attention to the fact that Eclairs Group failed to provide any information to the Board of JKX, which wrote to Eclairs on Mar 18, 2013 requesting details of its nominees’ experience, qualifications and general suitability – Borys Epstein, Stanyslav Yudin and Oleksandr Ratskevych – as well as their relationship with Eclairs or with any other JKX shareholder.
“Our investigations reveal that one of the Eclairs’ nominees, Yudin, is on the wanted list of the Ukrainian Ministry of Internal Affairs and faces charges for “abuse of authority or office with grave consequences” and is reported in the Ukrainian press to have fled to the UK. Another of the nominees, Mr. Oleksandr Ratskevych, is actually a shareholder in Glengary and a representative of Mr. Zhukov,” reads the letter.
JKX also said that the open letter from Eclairs was signed by Mykhailo Bakunenko, who purports to be a director of Eclairs. In fact Bakunenko is the Director of Corporate Development and Strategy at Ukrnafta, the Ukraine state controlled oil company.
In addition, the board believes that the activities of Kolomoisky and Zhukov in the countries where JKX has its most significant operations, important commercial and governmental/regulatory relationships which JKX has in these regions could be imperiled by their involvement in the management of JKX.
“A key reason the recent bond issue was adopted by your board to finance the future development of JKX was the unwillingness of banks to lend to JKX due to concerns over the shareholding in the company of Kolomoisky,” reads the letter.
As reported, Eclairs Group, which is under control of the co-owners of PrivatBank Ihor Kolomoisky and Hennadiy Boholiubov and a shareholder with a 27.5% stake in the largest oil and gas company JKX Oil&Gas with assets in Ukraine and Russia, has called on other shareholders to replace the chief executive officer Paul Davies and commercial director of the company Peter Dixon due to the company’s losses and the fall in its share value.
The largest shareholder said that the share price has fallen 88% in the last five years, as the market capitalization of the company has declined from GBP 838 million as of May 21, 2008, to GBP 100 million as at May 21, 2013, and the price of a share fell from 535.97 pence to 58.75 pence.
The second largest shareholder in JKX, the investment company Glengary with an 11.45% stake, supports the proposal to replace the top managers.
The following companies also hold large stakes in JKX: Aberforth Partners LLP – 7.81% Interneft Ltd. – 6.62%, national joint-stock company Naftogaz Ukrainy – 5.8%, The Boston Company Asset Management – 4.81% and Norges Bank – 3.09%.
JKX Oil&Gas in 2012 saw a $11.34 million net loss compared to a $59.137 million net profit a year before. The revenues of the company last year were down by 14.4%, to $202.86 million, while average daily production fell by 8.4%, to 8,280 boepd.
