JKX minority initiates vote for board shift

Proxima Capital, the holder of a 19.9% stake in JKX Oil & Gas (JKX LN), requested calling a shareholder meeting “to vote on a new direction for the company,” JKX reported on Dec. 11. In particular, Proxima suggested the company’s board be reduced to seven members from nine and replace all executive members. “The current JKX management has had its chance to demonstrate its ability to run the company properly and to fulfill its true value. Yet despite numerous promises of improvement, they have continually failed to do so,” Proxima’s CEO commented in the JKX release. “It would appear that the time has come to change the management team and ensure it is better equipped to restore value and to meet the challenges ahead,” Proxima’s nominee to the board said in the release, pointing out the company’s stock has lost 90% of its price in the last five years.

Recall, during the last two years, two shareholders of JKX, Eclaris (now holds 27.5%) and Glengary (now holds 11.5%), already attempted to replace JKX’s management due to the company’s poor performance. The also submitted their nominees to JKX’s board. JKX management was effective in diverting attacks from these shareholders by persuading other shareholders that these holdouts were acting in their own interests. Eclaris is widely recognized as being controlled by Ukrainian tycoon Igor Kolomoisky.

Alexander Paraschiy: It seems like JKX’s current management has a new protesting shareholder, though that does not necessarily mean that Kolomoisky gained a potential partner in his ongoing attempts to replace the JKX board. Judging from Proxima’s statement, it looks that the firm is not cooperating with Kolomoiskiy, so that could indicate one more corporate conflict within the company.

JKX’s current management has made a lot of suboptimal decisions and its replacement would be logical. If all the groups of protesting shareholders unite, they have the potential to pull it off. We are not sure that JKX’s value will improve if management is reshuffled, but at least the chance for improvement could be created.