Chatchai Yenbamroong has fired another round into his dispute with Tap Oil, with a letter to the company’s shareholders calling for their support in his proposed board spill.
Chatchai Yenbamroong has fired another round into his dispute with Tap Oil, with a letter to the company’s shareholders calling for their support in his proposed board spill.
In the letter, Mr Yenbamroong, a Thai entrepreneur who owns a 19.9 per cent stake in Tap Oil through his company Northern Gulf Petroleum, said the board’s history of divesting assets has left the company with a portfolio that is not capable of showing any near-term growth.
“Our immediate objective is clear – replace three members of the current board (who have overseen the destruction in shareholder value) with three directors independent of Northern Gulf and one Northern Gulf nominee who have substantial oil and gas experience to provide Tap with an opportunity to build shareholder value,” Mr Yenbamroong said.
He said he had been a patient and supportive investor in Tap, after having sold Northern Gulf’s Manora oil project to the company in 2010, but was concerned about the board’s decisions which haven’t returned any value to shareholders.
“As a Tap shareholder, purely based on the performance and track record of Tap, I firmly believe it is time for shareholders to take a stand to renew the company’s board to help build shareholder value,” Mr Yenbamroong said.
He highlighted that Tap’s share price has lost 75 per cent of its value in the last five years, while management has spent over $250 million in the past seven years and delivered no additional 2P reserves.
“We are simply exercising our right as shareholders to nominate four highly qualified directors, three of whom are independent of Northern Gulf.”
Mr Yenbamroong also stated that a $35 million default notice served to Northern Gulf by Mubadala Petroleum last week was contrary to arrangements between the two companies.
“Northern Gulf has served Mubadala with a notice of dispute, which may result in arbitration in Thailand,” he said.
Tap managing director Troy Hayden found it surprising that Mr Yenbmaroong was criticising the company's board given his situation with Mubadala.
"This raises questions over his financial management credentials, particularly as it is in shareholders' best interests for Tap to maintain a good relationship with the operator in respect to its 30 per cent interest in that project," Mr Hayden said.
"His attempt to appoint 80 per cent of the board when he only holds 20 per cent of the company is opportunistic, and his assertions around Tap's performance are clearly self-serving.
"He has not provided any alternate proposal for his vision of Tap, and what he would do differently to the current board.
"Nowhere in his statement does he set out an alternate plan for the company," he said.
Mr Hayden told shareholders not to accept any attempt to acquire control of the company without payment of an acceptable premium to all shareholders.
In March, Tap announced a strategic review process which included the possible sale of the business after Mr Yenbamroong proposed the board shake-up.
Tap shares were unchanged at 24 cents per share at 11:45am.
