Capricorn ready to clash with NewMed critics

Kristy Dorsey
Thu, 5 January 2023 

Simon Thomson, chief executive of Capricorn Energy

Capricorn Energy is getting set for a showdown with one of its biggest shareholders over its proposed merger with Israel's NewMed Energy.

Edinburgh-based Capricorn has rejected plans by Pallister Capital to scrap the deal, which Pallister says undervalues the independent energy company. In an open letter to shareholders, Capricorn's board of directors said Pallister's financial analysis was based on "several outdated and incorrect facts and assumptions" that overstate the value of Capricorn on a stand-alone basis.

"We have real concerns that shareholders who rely on the plan [from Pallister], without understanding the material risks and errors in its analysis, will likely be voting for value destruction," Capricorn said.

READ MORE: Investor rebuffs Capricorn proposals

Pallister has a 6.6 per cent stake in Capricorn, making it the company's third-largest shareholder. Other investors have joined Pallister in opposing the deal with NewMed.

Pallister has called for a general meeting to vote on its proposals to remove seven Capricorn directors from their supervisory roles, including chief executive Simon Thomson. They would be replaced by six nominees from Pallister who would be expected to terminate the deal with NewMed.

Capricorn said it will issue a notice next week for that meeting to be held on February 1, with a vote on the NewMed deal to be "on or around" the same date.

READ MORE: Capricorn ditches Tullow merger for Israeli gas specialist NewMed

Detailing its version of the financial circumstances, Capricorn said the merger with NewMed would deliver up to $920 million in fair market value to shareholders versus $866m under Pallister's plans. Pallister rejected this claim, saying the board appeared intent on "talking down" Capricorn's prospects to justify the "flawed" NewMed deal.

Capricorn agreed the deal with NewMed at the end of September, scrapping a previously-proposed merger with Tullow Oil in the process.