As announced on 17 October 2022, Reabold received a requisition letter (the "Requisition Letter") from Pershing Nominees Limited, which owns approximately 6.93% of the Company's issued share capital on behalf of five beneficial shareholders, requesting the Board to convene a general meeting under section 303 of the Companies Act 2006 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 is today posting 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 10.00 a.m. on 17 November 2022.
The Board Unanimously Recommends Shareholders VOTE AGAINST ALL Resolutions for, inter alia, the following reasons:
1. The Requisitioning Shareholders are opportunistically trying to gain control of Reabold, its operational asset base and its cash without paying a control premium.
2. The Board believes that the Requisitioning Shareholders interests are not aligned with the Company or its wider Shareholders. They are acting in a self-serving manner.
3. The Requisitioning Shareholders are seeking to replace the Board in its entirety without outlining any form of alternative strategy to ensure value for Shareholders.
4. Reabold has delivered on its investment strategy to date and has a plan to maximise value for all shareholders in the future. The Company intends to make a distribution to Shareholders of £4 million and planned replication of Corallian success to enable future distributions.
5. The track record of two of the Proposed Directors includes examples of significant value destruction at listed resource companies where they acted as directors. The other two Proposed Directors have no public company director experience that we are aware of.
6. Should the Requisitioning Shareholders be successful in removing the currently QCA Code compliant board structure, the corporate governance of Reabold could be jeopardised.
7. The Requisition has caused serious and extremely unwelcomed disruption and expense to the Board, the Company and its Shareholders.
A statement from the Board of Reabold:
"It is the Board's view that the requisitioned general meeting is an opportunistic attempt to seize control of the Company and its assets without paying a control premium to all shareholders, particularly as the requisition to replace the Board was received less than two weeks following the agreed terms of sale of Corallian to Shell for which Reabold will receive £12.7 million. The Company believes that a portion of the £12.7 million cash receivable by the Company from the sale of Corallian should be returned to Shareholders and we are today stating our intent to distribute £4 million to Shareholders upon receipt of the second tranche of funds from Shell. The mechanism of this distribution will be determined following due consultation with our Shareholders.
Of significant concern to the Company is the fact that the neither the Requisitioning Shareholders nor the Proposed Directors have outlined a strategy for Reabold. The current management team, with the oversight of the board, has created Reabold's portfolio since joining the Board in 2017, and the Proposed Directors have not articulated how they would create value for Shareholders.
We continue to develop our portfolio of assets, and over the next twelve months we expect to see the results from the Pensacola well, the results of which will be key for the adjacent licence that we are acquiring, the farming out of our Reabold North Sea portfolio, and the drilling of the first horizontal well at West Newton. The current management team has significant knowledge of these assets and how best to extract value from them. 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.