Legal & General calls for Capricorn Energy directors to step down

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

The London-listed oil exploration company was quashed 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 management is now warranted.”

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

Shareholders were shocked by a proposed merger of Capricorn with rival Tullow Oil, which Palliser called “misguided.”

Capricorn abandoned the Tullow deal in October in favor of another merger with Israel’s NewMed, but Palliser said this plan was also “misguided” and significantly undervalued the company.

Palliser, which owns just under 7 percent of Capricorn listed on the FTSE 250, already had the backing of the company’s other top investors, Madison Avenue Partners, Kite Lake Capital and Newtyn Management, to convene a general meeting and to fire most of the directors.

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

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