Palliser Pans Capricorn For Tying Deal Vote to Board Change

Article content

(Bloomberg) — Palliser Capital and other investors have criticized Capricorn Energy Plc for scheduling a shareholder vote on its proposed NewMed Energy LP deal at about the same time as a meeting called for by the activist investor to shakeup the company’s board. 

London-based Palliser, which is one of Capricorn’s biggest shareholders, was joined by other investors in calling for a separation of the two meetings. Together, the investors including Madison Avenue Partners and Newtyn Management, as well as Kite Lake Capital Management hold 32% of Capricorn’s share capital. 

Article content

“In the absence of any other plausible explanation, the Board’s decision seems self-serving — aimed at protecting many of the existing directors against removal,” the group led by Palliser, which is run by former Elliott Investment Management executive James Smith, said in a letter to the energy company’s board seen by Bloomberg News.

“Fundamentally, the sequencing of the general meetings unnecessarily limits shareholder optionality and is inconsistent with shareholders’ best interests,” Palliser and the other investors said in the letter. 

The activist investor is seeking to remove seven board members of Capricorn and has been agitating against the company’s plan to merge with Israel’s NewMed Energy. The activist says the deal undervalues its assets and there is significant additional value that could be realized on a standalone basis.

Article content

Holding the shareholder meetings close together would deprive a reconstituted Capricorn board of the opportunity to re-assess the NewMed transaction and consider other options, the investors argued. The latest letter is asking for the board change meeting to take place no later than Jan. 30, with the NewMed meeting occurring at least four weeks thereafter. 

Read more: Activist Investor Palliser Seeks to Oust Capricorn Directors

Capricorn last week issued a lengthy rebuttal defending its proposed merger with NewMed Energy, saying it would provide at least $120 million more of a short-term return than on a standalone basis. The energy company turned to the deal after dropping a highly criticized tie-up with Tullow Oil in September last year. 

The company declined to comment. 

In its letter dated Jan. 8, Palliser estimates that shareholders representing more than 40% of the company support the board change.

Palliser, founded by Smith in 2021, takes activist bets as part of its multi-strategy investment money pool.  

(Updates to say Capricorn declined to comment)