A major shareholder in troubled West of Shetland oil and gas explorer Hurricane Energy plc is demanding the removal of five directors of the firm.
Crystal Amber Fund, the activist investment fund that owns 14.7% of Hurricane, announced it has sent to the board of Hurricane “a requisition notice requiring Hurricane to convene a general meeting at which resolutions will be proposed ..”
The resolutions seek “to remove Steven McTiernan, Dr David Jenkins, John van der Welle, Sandy Shaw and Beverley Smith as directors and to appoint John Wright and David Cruik to the board as non-executive directors.”
Crystal Amber Fund said: “Since 2013, the fund has been a shareholder in Hurricane.
“To enable Hurricane to commence and continue its workstreams, the fund was, on three separate occasions, asked to provide capital to Hurricane.
“Each time, the fund responding favourably, investing a total of more than £25 million.
“The board of Hurricane had previously presented the company as a strategic asset of national importance.
“However, it has failed to reconcile its earlier estimates of the value of Hurricane’s West of Shetland portfolio with its latest, downbeat assessment.
“The Hurricane board has also demonstrably failed to protect shareholders’ interests.
“Its actions … provide ample evidence of its evasive and obstructive engagement with its shareholders.
“The fund believes there may well have been a failure by the incumbent board to act in accordance with section 172 (1) of the Companies Act 2006, which states that a director must act in a way most likely to promote the success of a company.
“The fund therefore believes that, at the earliest opportunity, a new Hurricane board should assume responsibility …”
Crystal Amber Fund added: “The Hurricane bonds are not repayable until July 2022.
“All interest has been paid and at 31 March 2021, Hurricane had $127 million of net free cash, with cash having increased by $10 million per month since 30 November 2020.
“The Hurricane board has said in clearest terms that Hurricane will have no difficulties servicing the future interest payments on the bonds.
“The fund does not currently understand how the board can say now, more than 12 months from the repayment date and having made almost no effort to find alternatives, that Hurricane will not be able to repay the bonds.”