Palliser Capital has accused directors at Capricorn Energy of "brazen disregard" as the hedge fund further stepped up its campaign to halt the Scottish firm's proposed merger with Israel's NewMed.
In an open letter in which it confirmed that it has increased its stake in Capricorn to 7.45 per cent, Palliser questioned the timing and structure of the forthcoming vote on February 1 in which shareholders will first decide on the NewMed deal, and then cast a ballot on Palliser's proposals for an extensive overhaul of the board of directors.
"Your decision to sequence the votes in this way and blinkered determination in pursuing a premature vote on the NewMed combination not only ignores the explicit requests of a significant portion of Capricorn’s shareholder base, but also epitomises the board’s wholly unacceptable approach to governance and shareholder engagement," Palliser said.
READ MORE: NewMed merger cynics question 'intransigence' of Capricorn directors
"This is a long-term issue and recent developments simply reinforce the concerns of over 40% of Capricorn shareholders who have lost trust and confidence in this board."
The letter comes a day after asset manager Legal & General took the "unusual step" of declaring that it will vote to oust the senior management team and reject the proposed merger with NewMed. Legal & General Investment Management owns just shy of 4% of Edinburgh-based Capricorn's issued share capital.
Palliser is pushing to replace seven of Capricorn's nine directors – including chief executive Simon Thomson – with its own nominees. Capricorn maintains that it has explored all potential options to the NewMed merger, and that Palliser's claims that the deal undervalues the business are based on "incorrect facts and assumptions".
READ MORE: Capricorn sets date for showdown with NewMed critics
The letter from Palliser continues: "Attempts to legitimise your actions simply do not stack up.
"You say the timing of the NewMed vote is in the best interests of shareholders to ensure they have all relevant information to make an informed decision about the future of the company. However, what shareholders are confronted with instead is a rushed and clearly deficient deal circular lacking in critical aspects."
The merger would create a company with a portfolio of 11.8 trillion cubic feet of gas, making it the largest gas-focused energy company listed in the UK.
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