As you may be aware, on 2 April 2012 I caused to be served a s249D notice upon the directors of Central Petroleum Limited, requesting that they convene a meeting of shareholders.
The notice seeks the removal of Dr Askin, Mr Faull, Mr Dunmore from the board of directors effective immediately at the EGM.
And that Colin Goodall, and Peter Cockcroft, and Simon Philis be appointed as directors effective immediately at the EGM.
The date and time and place of that meeting must be notified to the shareholders within 21 days of service of the notice, (2nd April) and the actual meeting held no later than 2 months (2nd June) from the date of service.
It is often said that there is only one certainty in life and that is “everything changes” as Labor found out in Queensland on Saturday 24 March.
In my opinion we will see a landslide of votes removing the three directors, the support received so far has been overwhelming and I thank you for that.
Shareholders money
Having said that, a company is nothing more than a legal entity, authorised by law to conduct business nationally and internationally, in essence a vehicle which is driven by the board of directors on behalf of the shareholders.
We the shareholders place great trust in the directors and hope that they have a predetermined strategy for the direction in which they seek to take the company, and ensure the company has the wherewithal to ensure that the company does not break down, and that the shareholders money is not only safe but also increases in value.
In short management by objective, all undertaken with a sense of urgency and propriety.
We the shareholders also place great trust in the directors, we entrust them with our superannuation funds, our life savings, our children’s future education and our hopes and dreams for a comfortable life.
Given a fair go
It has often been said that the one difference between Australians and other cultures is that we cling long and hard to the basic ethos of
“give some one a fair go”
That is usually understood to mean that we are mature enough to understand that most people do not have all the skills, training and experience required for a position when first employed and that people grow into the position and increase a their skills along the way.
We also accept that they will make mistakes in their employment. albeit costly at some times.
I am reminded of the adage
“The man who never made a mistake has never made anything”.
I think it a fair comment to make, that I have for a significant period of time (3 years approx) said publicly on Hot Copper that the management must be given a fair go and posters should stop throwing brick bats at the directors.
I observe that people think that John Heugh has been a dictator and overriding the decisions of the other three directors.
RUBBISH, ABSOLUTE UNADULTERATED GARBAGE !!
I have to say Karl on Hot Copper (2nd April) actually expressed the situation far more eloquently than I when he posted the following
“Hoorah! It's a miracle!
It's obvious, now, isn't. JH just stop in front of them on the bridge, loudly proclaiming "Thou shalt not pass!" as the other companies tried to push through to talk to the board.
Somehow the board, completely under the thrall of JH, where unable to vote against him, even though there was three of them.
And now that the bridge has collapsed, and JH has fallen, they are free to suddenly do all the things they'd wanted to do but were unable.”
I feel sure that Karl forgot to say,
“Yeah right !
if you believe that John Heugh was the impediment , I have a Harbour Bridge I would like to sell you “
It is ludicrous to suggest that one man can do as he wants contrary to decisions of the board for the past 6 years.
Think of that assertion logically and you can only come to one conclusion.
So I ask myself the following basal questions
i) “Have the board of directors been given a fair go?”
ii) “Have the board of directors been afforded all the necessary support and time and resources to do the job correctly?”
iii) “Have the board of directors been placed on notice that things need to improve?”
iv) “Have the board of directors shown any improvement ?”
v) “What should the shareholders do to protect their personal assets?”
From being involved as a shareholder in Central Petroleum Limited for some 3 years and having bought and sold and lost and made money, and from making careful observations of the management and its decisions over the past 3 years I can only conclude that the answers to questions I) to iii) inclusive must be answered in the positive. Item iv) I must answer in the negative.
Communications
Such has been my concern that I have expressed my serious concerns not only publicly on Hot Copper, but have also been moved to write to the Chairman directly. (Dear Mr Chairman posted 11 January 2012 on Hot Copper, letter dated 4 February 2012, and letter dated 20 March 2012)
Sadly, I have never received any communications under the personal hand of the Chairman, or any other senior executive responding to my specific concerns.
I pause at this point to observe that on 28 March the board saw fit to release and announcement to the market in the following terms;
“Central Petroleum Limited (“Company”) has become aware of certain public statements made whereby various shareholders will be seeking to requisition the Company to call and arrange a general meeting for the replacement of three of the Company’s four directors, namely, the replacement of Dr. Henry Askin (Chairman), Mr. Richard Faull (Non- Executive Director) and Mr. William Dunmore (Non-Executive Director) with Mr. Peter Cockcroft, Mr. John Jetter and Mr. Colin Goodall.
The Company confirms that it has not received a requisition to call and arrange a general meeting.” IBID.
While the statement
“it has not received a requisition to call and arrange a general meeting” ,
is perfectly accurate, it causes me grave concern that the board saw fit not mention that they had received my letter dated 20 March addressed to each of the three directors inviting them to resign by 9 a.m. on Monday 26 March 2012, and that s249D notice would follow in the event that no resignations were forthcoming.
I duplicate the relevant part of my correspondence dated 20 March 2012 sent to the board.
In my opinion the contents of the paragraph are incapable of any confusion.
“I hereby give you formal notice that, unless I receive your signed resignation on or before 9 a.m. (Sydney time) on Monday 26 March 2012, that without any further communication to you, during the week commencing 26 March there will be served on the Company a duly executed s249D notice along with the supporting signatures of at least 5% of the shareholders of the company requesting that the board of directors convene a meeting of shareholder for the purpose of removing the three directors and appointing our replacements”
I should observe at this point in time that I did not send the correspondence to Dalton Haldren and I assume that he was unaware of the correspondence.
I have no doubt that the termination of John Heugh on 26 March 2012 was the boards polite and public method of rejecting my invitation to resign quietly, and was a knee jerk reaction to my correspondence and an example of the common defense tactic of going on the offence.
Shareholders protect assets
I now address the final question:
v) “What should the shareholders do to protect their personal assets?”
Irrespective of the rights or wrongs of investing in the stock market, it is always open to the shareholders to buy and sell their stock with impunity (provide it does not contravene any insider trading or any other law).
That personal right is the cornerstone of our free market forces, a model that has made and broken millionaires over the centuries.
Sufficient time, energy and money has been afforded to the current board, sadly, I saw no discernable movement at board level until I placed the board on notice that I intended to serve a s248D requisition and seek their removal.
I saw no sense of urgency, no clear direction and decisions being made that would make the ordinary business person shake their head in disbelief.
Hence my reasons for issuing the s249D request.
I observe that we may well have two different EGM's in the near future, unless they call both meeting at the same time.
I am aware that these meetings cost approximately $50,000 or more depending on the amount of work that Computershare has to do.
I know this because I have received written quotations from Computershare, and I am happy to provide copies of those quotations if people contact me on the special email address set out below.
So if they decide to run two meetings, rather than calling both together and save money the company will have expended an additional $50,000 or more.
John Heugh
I have been asked about my position regarding John Heugh, and I think it important to set out what I believe is a sensible position to take for the benefit of the shareholders while also treating John, with an appropriate degree of respect for his legal rights and contribution to the company.
If there is a meeting (AGM or otherwise) in the future where John has to stand for election, then clearly the shareholders would be able to either remove him or save his job.
From a purely pragmatic position there is no doubt that the new board members will need a conduit between the old and the new, and access to some one who is fully aware of the complexities of what has happened over the past 15 years.
I have read in the media that John Heugh is not inside the company on a daily basis, the directors have apparently changed the locks and changed passwords to computers and any other items that he would have had in the ordinary course of events.
So my comments are directed at his directorship, as he currently has litigation in train in regards to his management contract it is not appropriate that I comment.
I do not intend to make any more comment about John Heugh, so please do not ask.
Removing John Heugh as director, would mean that the new board may be delayed in its decision making process for a considerable period of time by the complex task of trying to understand all facets.
What type of deals have been offered and rejected? What problems are on the immediate horizon?, which staff are loyal and which are not, which people can be trusted to maintain confidentiality and who cannot ? What potential deals are on the horizon and can those stakeholders be trusted? What are the intricacies of the Century Drilling litigation, and importantly what riches lie waiting for a bold and energetic board, and the shareholders?
The shareholders are entitled to have that assistance provided to the new board; just from the financial aspect it makes good business sense.
This is a complex resource company, its vast size and complexity of different resources differentiate this to the normal exploration company.
At this time John Heugh is an invaluable source of knowledge that cannot be replaced without significant costs and delay, in my opinion leaving him there is in the best interest of the shareholders.
You can never beat local knowledge.
The overriding consideration must be the fact that what is clearly needed over the next 12 months is stability at board level and a unified strategy that increases shareholders value.
Share value (Continual dilution)
One may wonder when are the cap raising going to end. They come with continuous regularity I could almost, set my watch by reference to the timing of any Cap raising.
As at 1 July 2011 the company had a total of 1,073,304,842 shares issued, and the share price was 10.5
Today we have 1,253,376,265 shares on issue, the share price as at the time of my sending the letter requesting the resignations of the three directors was approx 9.5 cents.
Now we are being asked to give them approval to issue more shares and cheaper options than we were ever offered, even when at the same share price back in 2010 during the Rights Issue.
Until we see the notice mentioned in the announcement to call a meeting of shareholders, (and I may stand to be corrected) I suggest that the real reason for calling the anticipated EGM, is not to obtain permission to issue the options, it is to seek approval for the lifting is Listing Rule 7.1 which would allow the directors to dilute the share capital by a further 15% , add that the 15% since August 2012, then our shares have effectively been diluted in the past 12 months alone by 30%
It is even worse when one looks at since 2009 (August 31st) when only 576,806,341 shares were on issue and a share price of 8.5 cents, the dilution has been a massive 75% dilution or an increase of 676,569,294 shares or over 105% increase.
Incredible, and these people want more money .
I observe that in The Australian Newspaper on Monday 2 April the following comment appears, without any denial from Dr Askin (Chairman) of Central Petroleum Limited,
“There is also the threat of a board spill, but an institutional or company placement would discourage this by diluting the shares of backers of Mr Heugh." So there you have the Australian media confirming that your shares are being diluted, clearly they cannot single I or any supporters out and just dilute those person’s shares.
So it must include you and your family.
These people have had sufficient time and money over the past 6 years to get the share price up to around 20 – 25 cents.
No, ladies and gents, I for one (and I am sure many others) will not be voting to give them any more money.
I do not want to see the current board come in with some strategy that may not be able to be removed by the new board of directors. .
No ladies and gents, I want the shareholders to tell the board, we have confidence in you, OR we do not have confidence in you, please leave!.
That basic decision should happen before asking for any more money.
Lets sort out who is going to run the company and let those persons make the decision if a cap raising is required.
Not, "lets approve a Cap Raising and then kick them out", that is madness!
I repeat, we shareholders place great trust in the directors, we entrust them with our superannuation funds, our life savings, our children’s future education and our hopes and dreams for a comfortable life.
We place trust in them to use it wisely and for our greater good.
I will vote against the Options and the Cap Raising, I invite others to do the same.
Clive Palmer
I read with interest that Clive Palmer’s may have taken a position in CTP .
Am I happy about further dilution, no I am not, and I am sure that Clive Palmer would not be happy if he were an existing shareholder.
But what I am very happy about is that Clive Palmer is taking a position in CTP, that in itself sends a very, very big message to the market, it says to the market: “I am here because I believe the share price will go up”
I also have no doubt that Clive Palmer will not carry any deadwood for very long, he will make his position quite clear if he is in a position of management of the company.
It will send a very big message to the various stock broking houses and the day traders, and long time investors, it will in short give confidence.
I stress I have never met the man, I have never spoken to him or any one that works for him. I realise he is a flamboyant character, so what !,
He is an Australian business man who has done very well for himself, and his shareholders.
Did I contact him , no I did not, and to my knowledge neither did any one I am associated with.
Change the board
It is now axiomatic that there has been a strong desire by shareholders to replace some or all of the board for a considerable period of time.
One thing leaps out from the fact that these particular alternate directors have chosen to stand for the board, it is simply this.
It is a clear indication of the confidence they have in the company.
I specifically comment that I am not implying that the current board are not honest and trustworthy people.
Mr Goodall and Mr Cockcroft are people that have excellent reputations, in the business arena, they are highly respected, and have a track record of success, they have an incredible network of contacts at the highest levels of business.
Simon Philis, has an excellent reputation in the financial arena, his honesty and integrity and ability are beyond question, his strong relationships with global investment banks and non-banking financial institutions will be of great benefit to the company.
Success attracts success.
I make no bones about it. I fully and wholeheartedly support the removal of the three directors and the replacement of them by the alternate persons.
I suspect that the forthcoming weeks will enlighten us all; I look forward with great anticipation to the events as they unfold.
One thing I am absolutely certain about, it is time for change, I sincerely hope that any change can be effected with the minimum of public embarrassment to the current board.
I can see big things happening in the near future.
We simply need to change the board - a stance I have maintained for a very long time.
I wish us all well and I will see you all on the other side of this conflict.
(20min delay)