Capricorn concedes: bosses quit, merger vote delayed

Edinburgh-based oil and gas firm Capricorn Energy announced that it has conceded victory to shareholder pressure with CEO Simon Thomson, chair Nicoletta Giadrossi and several directors resigning from its board immediately and the date for a vote on its planned merger delayed.

Capricorn — formerly known as Cairn Energy — has faced growing opposition from shareholders, led by Palliser Capital, to its planned merger with Israel’s NewMed Energy, who argue that it undervalues Capricorn.

In a statement, NewMed said: “In view of these developments and the resignation of most of the Capricorn board members, the Partnership estimates that the probability for the closing of the transaction has significantly decreased.”

Palliser has a roughly 7% stake in Capricorn and has claimed to have the support of around 40% of shareholders.

Proxy advisory companies ISS and Glass Lewis have also recently come out against Capricorn’s proposed merger with NewMed.

Capricorn said in a stock exchange statement on Tuesday that chair Giadrossi, CEO Thomson and directors Peter Kallos, Alison Wood and Luis Araujo will step down from the Capricorn board with immediate effect.

Capricorn had planned to hold votes on changes to its board and approval for the merger with NewMed Energy on February 1.

Activist investor Palliser Capital criticised this plan, saying it would not allow a new board sufficient time to consider the merits of the merger.

Capricorn announced on Tuesday that it will now hold the vote on the NewMed merger on February 22. The vote on changes to the board will take place on February 1.

Keith Lough and CFO James Smith will remain on the board temporarily but intend to leave the board before the vote on February 1.

Two directors, Cathy Krajicek and Erik B. Daugbjerg, will remain on the board to “engage with the nominee directors to ensure an orderly transition and appropriate continuity of governance.”

Capricorn announced on December 19 that its third-biggest shareholder Palliser Capital had called for a general meeting of the firm to set a vote on removing seven Capricorn directors including CEO Simon Thomson.

Earlier this month, Palliser Capital, together with other shareholders Madison Avenue Partners, Kite Lake Capital, Newtyn Management, Irenic Capital, and VR Capital, whose combined interests represent over 32% of Capricorn Energy, published a letter sent to the Capricorn board.

Last September, Capricorn scrapped a plan to merge with Tullow Oil after investors voiced opposition. Capricorn withdrew its intention to recommend an all-share merger with Tullow Oil and said instead it would recommend to shareholders that Capricorn combine with NewMed Energy.