By Shadia Nasralla
LONDON (Reuters) -Capricorn Energy investor Legal & General Investment Management is in favour of changing Capricorn's directors, it said on Tuesday, after another investor's call for a vote to oust seven of them including the CEO.
"We believe there has been a substantial breakdown in relations between the current Capricorn board and Capricorn shareholders," Legal & General, which owns a little less than 4% of Capricorn, said in an emailed statement.
"Despite extensive engagement with the Capricorn board since the summer, we retain a number of concerns with the strategic direction and approach by the board. Therefore, we believe a change of directors is now warranted."
Capricorn's third-biggest shareholder, Palliser, on Monday called for a general meeting to set a vote on removing seven Capricorn directors from supervisory roles, including the chief executive and finance chief, in a plan Capricorn rejects.
Palliser's move ostensibly targets their removal from supervisory roles, though their executive future at the company would be called into question if Palliser succeeds.
Adam Katz, chief investment officer of Irenic Capital, invested in around 1.9% of Capricorn, said Irenic supports Palliser's initiative because Capricorn’s leadership "has lost the confidence of shareholders."
Legal & General, Palliser and Irenic belong to a group of Capricorn investors opposed to a planned merger with NewMed Energy, which would create a gas producer focused on Israel and Egypt at a time when Europe is looking for non-Russian gas, arguing that it undervalues Capricorn.
Palliser has said that it knows of more than 40% of Capricorn shareholders who are opposed to the NewMed merger. It also said it has received letters of intent from 28% of Capricorn shareholders in support of its plans to overhaul the board.
The NewMed deal needs a simply majority of votes to go through.
Capricorn did not immediately reply to a request for comment on Tuesday.