The UK’s takeover watchdog has ruled that shareholders of Petropavlovsk who are seeking to overhaul its board are not acting in concert to control the company.
The Takeover Panel, which regulates deals in the UK, said that three of the four directors proposed by the shareholders Renova, M&G and hedge fund Sothic Capital were independent.
“As a result, the Executive has concluded that the resolutions proposed by Renova, M&G and Sothic are not board control-seeking … and accordingly, that these shareholders, and the proposed new directors, should not therefore be considered to be acting in concert and that there is therefore no requirement for a mandatory offer to be made under the code,” the panel said.
Still, it said that one of the directors proposed by Russia’s Renova, Vladislav Egorov, was not independent, given that he is an employee of Renova.
The shareholders proposals will be subject to a vote at the company’s annual general meeting on June 22. DE Shaw, another shareholder, is also backing the proposals by M&G and Sothic.
Together the shareholders have almost 40 per cent of the shares in Petropavlovsk. They are all calling for shareholders to vote against the re-election of the current chairman and co-founder, Peter Hambro, at the upcoming meeting.
Mr Hambro, a scion of the Hambro banking dynasty, co-founded the company in 1994. On Thursday, he said:
Petropavlovsk accepts the narrow remit of the Takeover Panel in such circumstances, which in our case is limited to using its best efforts to determine whether or not the proposed new directors are “independent” of those proposing them.The Petropavlovsk board continues to maintain that replacing more than half the members would be disruptive to the successful completion of the very promising projects we have underway.My primary motivation remains the protection of the interests of all shareholders and thus it is more important than ever that all shareholders vote with the Board’s recommendations on 22 June to protect themselves.
The gold miner’s shares have fallen by over 90 per cent over the past five years and the company was forced to restructure and raise equity in 2015 following a collapse in the gold price.
M&G, Sothic and DE Shaw say the company has under performed its peers since its restructuring in 2015 and needs new directors to deal with the company’s debt and improve the company’s corporate governance. Both DE Shaw and M&G contributed $35m during the company’s restructuring.
Renova has declined to comment on its proposed directors.