TIDMCRS
RNS Number : 6913K
Crystal Amber Fund Limited
23 December 2022
23 December 2022
CRYSTAL AMBER FUND LIMITED
("Crystal Amber", the "Company", or the "Fund")
Crystal Amber requisitions general meeting of Hurricane Energy
plc ("Hurricane")
Proposal to remove six directors and appoint two new
directors
Crystal Amber Fund, the activist investment fund, announces that
it has sent to the board of Hurricane a requisition notice
requiring Hurricane to convene a general meeting at which
resolutions will be proposed to remove executives Antony Maris and
Richard Chaffe, Non-Executive Chairman, Philip Wolfe and,
conditional on the appointment of Tony Buckingham and Franco
Castelli, Crystal Amber nominees, David Craik, John Wright and Juan
Morera, in order for Hurricane to maintain its independence. As
regards the removal of Messrs. Craik, Wright and Morera, this is
required to ensure that the board of Hurricane maintains its
independence and is no reflection on the performance of these
Crystal Amber nominees: Crystal Amber thanks them for their
contributions. The requisition notice proposes to appoint Tony
Buckingham and Franco Castelli to the board as directors. Details
relating to Tony Buckingham and Franco Castelli are set out
below.
The Fund has been a shareholder in Hurricane since March 2013.
In May 2021, the Fund requisitioned a general meeting to remove
five directors and appoint two directors. In June 2021, immediately
prior to the general meeting, the five directors resigned and
Crystal Amber's nominees, David Craik and John Wright were
appointed.
In February 2022, the Fund requested and was offered a position
on the Hurricane board to assist Hurricane to fully realise its
potential. In March 2022, Juan Morera was appointed to the board.
Subsequently, the arrival of two additional independent
non-executive directors means that the Hurricane board now meets
the necessary governance standards.
On 2 November 2022, Hurricane announced that it had received an
unsolicited offer for the company and that following a period of
engagement with the bidder, Hurricane had received an offer for the
entire issued share capital of the Company at an indicative offer
of 7.7p per Hurricane share in cash (the "Indicative Offer") (the
"Hurricane Announcement"). In the Hurricane Announcement, the
Hurricane Board stated that it had concluded that the Indicative
Offer should not be recommended to Hurricane shareholders. The
Hurricane Board also stated that it had decided to launch a formal
sale process for Hurricane to establish whether there is a bidder
prepared to offer a value the Hurricane Board considers attractive,
relative to the standalone prospects of Hurricane as a publicly
listed company and one that should be recommended to all Hurricane
shareholders.
In the Hurricane Announcement, Hurricane stated that whilst the
outcome of the formal sale process is uncertain, it is in a very
strong financial and operational position.
In the Hurricane Announcement, the Hurricane Board stated that
in the event that the formal sale process does not result in a
transaction, it intends to commence a significant capital return
programme with up to $70 million (equivalent to 3.1p per Hurricane
share at the then current exchange rates) to be returned to
shareholders in Q1 2023, upon completion of a capital reduction by
Hurricane which would require the approval of Hurricane
shareholders and confirmation by the High Court of Justice in
England and Wales. Furthermore, Hurricane announced that in the
absence of alternatives that would generate better returns for
Hurricane shareholders, further distributions totalling up to $110
million could be made during 2023 and 2024 in aggregate, with a
final distribution of up to $30 million in 2025, following the
cessation of production from the Lancaster operations. Hurricane
further advised that the amount of cash available to distribute to
Hurricane shareholders following cessation of operations and
decommissioning is dependent on many factors, including oil price,
ultimate oil recovery from Lancaster, whether the decision to cease
operations is planned or forced and the cost and timing of
decommissioning.
In the Hurricane Announcement, the Hurricane Board reserved the
right to alter any aspect of the process as outlined above or to
terminate the process at any time and in such cases will make an
announcement as appropriate. The Hurricane Board also reserved the
right to reject any approach or terminate discussions with any
interested party at any time.
The Fund notes that on 18 November 2022, Hurricane announced
that it had received multiple expressions of interest from several
counterparties.
The Fund also notes that Hurricane has forecast net cash at the
end of 2022 to be approximately $118 million, equivalent to 4.9p a
share. The Fund believes that as long as well performance is able
to continue as forecast, production could continue into Q2 2025,
based upon current oil prices, additional value in excess of the
indicative offer of 7.7p per share could be returned to
shareholders. However, thereafter, given management's failure in
September 2022 to achieve regulatory approval for its "P8" well
after trumpeting its potential and fast payback to investors, under
its present management, Hurricane has become a cash rich and cash
generative "orphan asset," with no further growth potential.
The Fund has concluded that in the continuing absence of a firm
offer that reflects the value of Hurricane, it would be better
served under new management that has a track record of delivering
for shareholders. Crystal Amber has been in discussions with Tony
Buckingham, the founder and Chief Executive of Albion Energy
Limited and Franco Castelli, Managing Director of Albion Energy
Limited. Tony Buckingham is the founder of Heritage Oil, which in
2014 was acquired for $1.6 billion. [Albion Energy Limited
discovered more than two billion barrels gross of oil.] Tony
Buckingham and Franco Castelli have agreed to act as directors.
The Fund has also been informed by Albion Energy Limited that it
is of the view that there remains substantial potential within
Hurricane's acreage and that under the right leadership, Hurricane
could attract significant new investment to fund growth
opportunities. In the event that Tony Buckingham and Franco
Castelli are appointed directors of Hurricane, Crystal Amber
understands that the remuneration packages for Tony Buckingham and
Franco Castelli will be set by the ongoing Remuneration Committee
of Hurricane but it would be supportive of the grant of options to
Albion Energy Limited over 100 million Hurricane shares, equivalent
to approximately 5% of the issued share capital of Hurricane at an
exercise price of GBP0.001, being the par value of a Hurricane
ordinary share, with such options vesting quarterly over the
following 12 months. In addition, Crystal Amber would be supportive
of Hurricane granting options over a further 200 million shares,
equivalent to approximately 10% of the current issued share capital
of Hurricane to Albion Energy Limited, at an exercise price of 10p
a share. A vesting condition of such options would be that, by 31
July 2023, Hurricane raises a minimum of GBP250 million of capital
to spend on a drilling programme within Hurricane's acreage. These
options should vest quarterly in arrears over two years.
In the event that Crystal Amber accepts a cash offer from a
third party that is declared wholly unconditional on or before 30
April 2023, Crystal Amber would give Albion Energy Limited the
economic value of effectively having an option over 20 million
Hurricane shares held by Crystal Amber at an exercise price of 7.7p
a share.
Hurricane has announced its intention to return $70 million in
Q1 2023. Crystal Amber is supportive of this capital return and
would expect any new board of Hurricane to honour this commitment,
in the absence of an offer that is declared wholly
unconditional.
For further enquiries please contact:
Crystal Amber Fund Limited
Chris Waldron (Chairman)
Tel: 01481 742 742
www.crystalamber.com
Allenby Capital Limited - Nominated Adviser
David Worlidge/Jeremy Porter/Freddie Wooding
Tel: 020 3328 5656
Winterflood Investment Trusts - Broker
Joe Winkley/Neil Langford
Tel: 020 3100 0160
Crystal Amber Advisers (UK) LLP - Investment Adviser
Richard Bernstein
Tel: 020 7478 9080
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END
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