Longford Energy’s new team takes over – Financial Post
In the end, the proxy battle at cash rich Longford Energy Inc., was remarkable for its speed and efficiency. Indeed, the battle was over, with no shots being fired, before both sides, the dissidents led by major shareholder, Goodwood Inc. and the incumbents, led by Stan Bharti and Ahmed Said, had a chance to submit different circulars for an upcoming special meeting.
As a result, the company, which recently sold its 40% interest in an operation in Iraq, has four new directors and a new interim chief executive, Peter Puccetti, who is also chief executive at Goodwood.
The other newcomers include some well-known Canadian businessmen: Ian Delaney (the former chief executive and now chairman at Sherritt International who will be Longford’s chairman); Allan Bezanson (a managing partner of Cornerstone Capital Partners) and Daniel Owen, who along with Delaney was involved in one of Canada’s earliest proxy battles, the successful fight to replace the directors at Sherritt about two decades back.
Ahmed Said, Longford’s former chief executive, is the one carry-over from Longford’s former board. At its annual meeting next month, Lomgford will ask its shareholders to add another director: Wesley Hall, the founder of Kingsdale Shareholder Services Inc. and Kingsdale Communications Inc.
“The new board intends to actively review Longford’s prospects and opportunities to best utilize its capital so as to maximize long-term value for shareholders, whether through acquisitions, mergers, other transactions or in some other way,” said Longford’s new team.
The new team gave Longford’s shareholders a commitment: in the absence of one or more transactions being undertaken or agreed to by Longford prior to its 2013 annual meeting of shareholders, it will put to a vote of shareholders at the 2013 Meeting “the decision of whether Longford should pay substantially all of its then available cash to its shareholders by dividend or other distribution.”
In effect the new team has given itself a year to find itself a deal: if it can’t then it will essentially ask its shareholders to wind up the company and pay out the available cash.
At least one Longford shareholder, who requested anonymity, is pleased with the solution. “I see this as a success. And as shareholders their interests are aligned with ours,” he said, noting that the change should mean the end to large payments (more than $3-million in all) that were made to insiders following the asset sale earlier this year. That asset sale netted US$68-million, of which US$37-million was paid in cash to Longford and the rest to the Kurdistan Regional Government.
At that time Longford said it started the process of identifying international oil and gas acquisition opportunities. “The Board of Directors of Longford strongly believes that given the current prevailing market dynamics in the junior oil and gas sector and given the company’s current cash position, there are exceptional opportunities to pursue with the potential of creating significant value for shareholders. As a part of its strategic review, the company expects to recruit key management personnel to assist in executing its new strategy,” it said at the time.
Now it will be the the new team at Longford that will try and seek a similar objective. And given the well-documented woes for the junior resource sector, companies with cash will always attract interest.