Empire agrees to board overhaul

Empire Oil & Gas has conceded defeat in its bid to stave off efforts by major shareholder ERM Power to overthrow its board, saying it now believes ERM's proposal is the best way forward for the company.

Empire managing director Craig Marshall and directors Neil Joyce and Jeffrey MacDonald have each resigned from their positions in line with the changes proposed by ERM, with executive director Bevan Warris the only Empire representative to remain on the board.

ERM director Tony Iannello has been appointed chairman of Empire and will be joined on the board by fellow ERM director Brett Heading under a deed of settlement between the two companies.

The new board will look to appoint an experienced chief executive, an independent chairman and another independent director within three to six months.

At this time, Mr Heading will resign from the board while Mr Iannello will resign as chairman but remain a non-executive director.

Mr Marshall will serve as a consultant to the company for a period of six months to oversee the transition, receiving $56,000 a month for his services.

He will also receive a termination payment of around $73,000.

"Although disappointed to be leaving Empire as a director after being the company's managing director from 1994, I am proud of what my fellow directors and I have achieved over that time," Mr Marshall said in a statement.

"I recognise that the company is entering into a new and exciting phase of its life and I wish the new directors and ERM all the best for the future of Empire.

"I encourage all shareholders to get behind the new board in a united way without rancour."

Mr Iannello said the settlement was a major step forward for the company and would unlock the value of Empire's assets for its shareholders.

"This agreement delivers a swift, certain transition and enables the new Empire board to begin work immediately on implementing the strategies for unlocking this value," Mr Iannello said.

Empire shareholders had been due to vote on the proposed changes at an extraordinary general meeting on Tuesday after months of public hostility between the two companies.

Just three weeks ago, Mr Warris wrote to shareholders warning ERM's proposal would cause significant cost to the company and delay its corporate and exploration plans.

"I urge shareholders not to be swayed by ERM's repeated statements that it is not attempting to seize board control of your company," Mr Warris said at the time.

"Plainly, that is what it is intending to do without paying or making any offer for that control.

"Why else would ERM be going to such lengths and spending so much time and energy on an asset outside ERM's core business?"

ERM has consistently claimed it has no intention to make a takeover bid for Empire and is merely interested in ensuring the value of the company's assets are reflected in its share price.

Empire's former directors have also agreed to use their best efforts to end defamation proceedings against Empire shareholders on a "walk-away basis" in which each party pays their own legal costs.

ERM had previously flagged it would look to recover legal costs paid by Empire for its directors’ personal legal actions.

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 at the time 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.

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.