molopo malcontents on move

Financial Review p17
John Stensholt

A group of wealthy investors, including two billionaires, is pushing to oust the chairman and a director of junior oil and gas explorer Molopo Energy.

The group which includes billionaires Bruce Mathieson and Boris Liberman, as well as Melbourne property developer Max Beck and Fairfax Media Chairman Roger Corbett - lodged a request with the Molopo board for an extraordinary general meeting.

The group has agreement from the 5% of shareholders needed to force an EGM.

They are unhappy with the board's management of Molopo, the shares of which have fallen 24% this year, and, in particular plan to spin off its Canadian oil assets in 2011.

The group is seeking the removal of Molopo Chairman Donald Beard and non-executive director Bruce Hobday, and their replacement with Mr. Beck and Greg Lewin, previously president of Shell Global Solutions.

Other shareholders behind the move are Terry Jackman, Sundland Group chairman, and Eddie Cutner, co-founder of Melbourne apartment developer Central Equity.

If the group achieves its aim, Mr Lewin will be nominated as new Molopo chairman. He and Mr Beck said they would push for the company to accelerate production of its assets, which include oil shale projects in Canada and coal-seam gas assets in Qld and South Africa.

Mr Beck said the group was taking the action after what he described as a prolonged period of share price underperformance. He claimed the group had received feedback from other shareholders who had expressed dissatisfaction with the board.

"This is not a step we have taken lightly," Mr Beck told AFR. "We made a friendly approach to the board through the chairman on December 15, but we did not receive a response within the agreed timeframe. Shareholders have heard enough excuses and Molopo needs a board with a sense of urgency.

"The market's reaction to the company's most recent major announcements reflects its scepticism about the board and its ability to deliver."

The company announced on November 29 that it would spin off its interests in the Spearfish and Bakken oil projects in Canada into a new entity called Molopo Canada, which is expected to list on the Toronto Stock Exchange in the first quarter of 2011. Molopo shares have fallen since that announcement.

Molopo managing director Stephen Mitchell said the shareholder action was opportunistic, and defended the company's strategy. " I couldn't have a better or more experienced Board," he said. "In terms of our Canadian assets the market view is that the money we've spent there in the past 15 months, about $100M, will double in value when we do this. We've not had a single call from any shareholders suggesting we review the strategy. We welcome constructive shareholder feedback and we, too, are frustrated with the short-term performance of the share price."