Empire Oil & Gas says a move by its biggest shareholder ERM Power to replace Empire directors with its own representatives has compromised its relationships with contractors and caused disruption to the business.
Empire Oil & Gas says a move by its biggest shareholder, ERM Power, to replace Empire directors with its own representatives has compromised its relationships with contractors and caused disruption to the business.
Both companies have made a pitch to Empire shareholders ahead of an extraordinary general meeting later this month, which will decide the fate of the current Empire board.
ERM has called for shareholders to remove 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.
In its latest quarterly report, Empire says ERM's actions had directly or indirectly resulted in Empire losing operatorship of its EP437 joint venture with Key Petroleum, as well as drilling delays and contractors expressing significant concerns and uncertainty about their ongoing relationship with the company.
Empire executive director Bevan Warris this week wrote to shareholders warning that 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.
"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?"
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 also says that it will seek to recover legal costs paid by Empire or its directors' personal legal actions against shareholders.
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.
ERM has flagged that 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.