RPT-UPDATE 2-Shareholder calls for shake-up at Exillon Energy

Mon Jan 14, 2013 4:03pm GMT

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* Exillon to hold EGM after request from shareholder Worldview Capital

* EGM to consider removal of chairman, appointment of three new directors

* Shares fall 8 pct

By Sarah Young and Megan Davies

LONDON/MOSCOW, Jan 14 (Reuters) - Russia-focused oil producer Exillon Energy is to hold a shareholder meeting to consider a proposal for a management shake-up at the London-listed company by one of its biggest investors.

The shareholder, Worldview Capital Management, which said it owns a 13 percent stake in Exillon, has called for a management overhaul and strategic review amid what it described as "board inexperience" and "significant underperformance".

A shareholder vote at the extraordinary general meeting (EGM) will consider the removal of chairman David Herbert and the appointment of three new directors proposed by Worldview, Exillon said.

"We have been trying to engage with the board in a very constructive way since May," said Andrey Kruglykhin, founding partner of Worldview, which initially invested in Exillon in late 2011.

"Unfortunately the board has little will to implement any change. They also deny the existence of any problem."

Shares in Exillon have halved in value in the last 12 months, trading down 8 percent on the previous session at 134 pence by 1510 GMT on Monday, valuing the firm at around 217 million pounds ($350 million) according to Thomson Reuters data.

The shares hit a low in June last year of 86 pence.

Exillon said in a statement that it has engaged extensively with Worldview over the past seven months and that all the matters raised are "public information, and in most cases have been public information for over a year".

Exillon's EGM comes amid growing investor concerns in London about some companies in the natural resources sector. While such companies have increasingly dominated the trickle of businesses going public in London, high profile difficulties at some of those companies, such as Indonesian miner Bumi, have made investors more wary.

INVESTOR CONFIDENCE

Exillon, which has assets in Russia's oil-rich regions of Timan-Pechora and Western Siberia, is one of a clutch of oil independents working in Russia, the world's largest oil producer where the top six firms, led by state-owned Rosneft, account for nearly 70 percent of output of 10.5 million barrels per day (bpd).

The company, which pumped 16,000 bpd in December from its two Russian fields, has acknowledged that its volatile monthly output figures have been a matter for debate with its shareholders and that it will switch to quarterly reporting.

In a letter made public on Monday, Switzerland-based Worldview said that it believed Exillon's chairman and its chief executive, Mark Martin, lacked experience in the oil sector, which had resulted in production setbacks.

Herbert was previously Head of International Corporate Finance at ING Bank and has worked for more than 10 years at BP , according to Exillon's website. Martin previously ran Equity Capital Markets at ING and led a number of deals for oil and gas clients in Russia, the web site said.

Worldview also raised concerns about the role of the company's former executive chairman Maksat Arip, a Kazakh businessman who owns 30 percent of Exillon and who was formerly chief executive of Kazakhstan Kagazy, another London-listed firm.

Exillon, which floated in London in December 2009 with a placing at 153 pence a share, was fined nearly 300,000 pounds last April for failing to disclose payments made to Arip when he was chairman.

"We are not coming to rock the boat, we are trying to protect our investments, make sure investor confidence is restored and add value to the board," said Kruglykhin.

Analysts at Mirabaud said in a research note that while Exillon has suffered setbacks in the past, "it is hardly an exception to the rule and recent operational performance on the ground has been strong".

"Indeed, we would argue that the outlook for Exillon is rosier than it has been for some time making the timing of the requisition seem a little strange," said Mirabaud.