ERM Power says it will seek to recover legal costs paid by Empire Oil & Gas for its directors' personal legal actions against shareholders as a showdown between the two companies looms at a general meeting next month.
ERM Power says it will seek to recover legal costs paid by Empire Oil & Gas for its directors’ personal legal actions against shareholders as a showdown between the two companies looms at a general meeting next month.
In its annual report, Empire said it had incurred legal fees of $675,593 during the 2013 financial year, mostly related to defamation claims pursued by Empire directors against a number of its shareholders.
Empire said it had received legal advice that the allegations contained in the material affected the company's reputation and that any proceeds received from the litigation would benefit the company and its shareholders.
Empire's major shareholder, ERM, said today that, should it be successful in overhauling Empire's board, it would immediately consider ending the indemnities Empire had provided to its directors and seek legal advice as to whether it could recover the costs incurred under the indemnities.
ERM has called a general meeting of shareholders next month to consider removing Empire executive chairman Craig Marshall and fellow directors Neil Joyce and Jeffrey MacDonald, with Bevan Warris the only current Empire director to remain in place under the plan.
Under the proposal, ERM representatives Brett Heading and former Western Power managing director Tony Iannello will be appointed as directors and the board will appoint a new chief executive and two independent directors, one of whom will take over as chairman.
Brisbane-based ERM is Empire's joint venture partner in a number of projects, including the Red Gully gas and condensate processing facility near Gingin; it holds a 10 per cent stake in Empire.
ERM claims that it had been patient with Empire's board but that the directors had failed to deliver sufficient value for shareholders and had done a poor job of managing the company's assets.
Empire directors last week wrote to shareholders warning that ERM lacked experience in the oil and gas industry.
"I respecfully consider that it would be a mistake to change the management of the company at this time and leave the appointment of those managers to ERM who is Empire's minority joint venture partner in seven joint ventures," Mr Marshall said.
"ERM is a power distribution company; not an explorer or an entity experienced in oil and gas operations."
Mr Marshall also defended his new employment contract, saying it was appropriate he moved from a contracting role to an employee role as the company had gone from being an explorer to a producer.
His new contract is for three years, not five as the company had previously reported. He said this was a typographical error in the company's annual report.