Legal & General calls for Capricorn Energy directors to step down

Legal & General piles more pressure on Capricorn Energy as it calls for directors to step down

Capricorn Energy is facing a mounting backlash after another major investor called on its directors to step down.

The London-listed oil exploration company was blasted by Legal & General Investment Management (LGIM).

The investor said there has been a ‘substantial breakdown in relations’ between the company and its shareholders and that a ‘change of directors is now warranted’.

Pressure: Legal & General said there has been a ‘substantial breakdown in relations’ between London-listed oil exploration company Capricorn Energy and its shareholders

LGIM’s unusually outspoken comments came just a day after Palliser Capital, an activist investor, called a general meeting to oust seven of Capricorn’s nine directors including chief executive Simon Thomson.

Shareholders were rattled by a proposed merger of Capricorn with rival Tullow Oil, which Palliser branded ‘misguided’.

Capricorn abandoned the Tullow deal in October in favour of another merger with Israel’s NewMed, but Palliser said this plan was also ‘ill-conceived’ and significantly undervalues the company. 

Palliser, which owns just under 7 per cent of FTSE 250-listed Capricorn, already had the backing of the firm’s other top investors Madison Avenue Partners, Kite Lake Capital and Newtyn Management, to call a general meeting and oust most of the directors.

Now LGIM, the UK’s largest asset manager, has thrown its weight behind them.

NewMed is proposing to pay Capricorn’s shareholders a £511million special dividend, and would take a 10.3 per cent stake.