LONDON--(BUSINESS WIRE)--In response to the recently proposed merger between Capricorn Energy PLC (LSE: CNE) (“Capricorn” or the “Company”) and NewMed Energy LP (“NewMed”) (the “Proposed Merger”), Palliser Capital (“Palliser”), one of the Company’s largest investors with interests representing approximately 6.6%1 of the Company’s outstanding share capital, has today released a presentation outlining its opposition to the Proposed Merger. This is accompanied by a recently prepared independent fair market valuation of Capricorn by ERCE2 and reinforced by Palliser’s recommendations for a superior plan to release value (the “Value Optimisation Plan”).
In early August, Palliser called for the abandonment of Capricorn’s previously proposed merger with Tullow following a months-long engagement with the Company’s Board and senior management team, which was supported by other major shareholders. Palliser is disappointed that the Company has pivoted to another one-sided deal which similarly does not reflect the Company’s intrinsic value. ERCE’s report values Capricorn at US$1,131 million. This translates to 315 pence per share, representing a 29% upside to the Company’s closing share price on 25th October 2022 and a 27% upside to the implied value of the NewMed transaction.
In addition to highlighting material valuation concerns, Palliser’s presentation emphasizes its view that the Board’s actions in agreeing to the Proposed Merger demonstrate significant corporate governance shortcomings and appear to be self-serving in nature.
Palliser urges Capricorn to recognize that it need not be a forced seller; if Capricorn cannot find a superior deal—one at fair value in a short and defined timeframe—then the Company should stop wasting further shareholder resources and instead follow the proposed Value Optimisation Plan. Palliser believes this would unlock Capricorn’s intrinsic value of 315 pence per share in the near term and up to 400 pence per share over the medium term, resulting in a far better outcome for Capricorn shareholders than the Proposed Merger and the liquidation value yardstick.
Palliser’s presentation and proposed Value Optimisation Plan can be accessed above.
The independent ERCE valuation can be accessed above.
Palliser Capital is a London-based, global multi-strategy investment firm that applies a value-oriented investment philosophy across a range of strategies and asset classes throughout a variety of global markets.
1 Form 8.3 - Capricorn Energy PLC - 15:15:06 30 Sep 2022 - News article | London Stock Exchange
2 ERCE is an industry leading oil & gas consultancy specialising in reservoir evaluation, commercial analysis and economic assessment with decades of collective global experience providing independent services to energy sector participants; ERCE’s report was prepared at Palliser’s expense, on the basis of publicly available information and in accordance with the VALMIN Code