Posting of Notice of General Meeting

RNS Number : 6524I

Block Energy PLC

13 August 2021

 

13 August 2021

Block Energy plc

("Block" or the "Company")

Posting of Notice of General Meeting

Further to the Company's announcement on 26 July 2021 concerning the request by Forest Nominees Limited (on behalf of G.P. (Jersey) Limited) for the Company to convene a further general meeting, Block Energy plc, the development and production company focused on Georgia, announces that the Notice of a General Meeting and Form of Proxy will be posted to shareholders later today and are available in the Investors section of the Company's website at  www.blockenergy.co.uk/investors/circulars-presentations-and-reports/.

An extract from the letter from the Chairman in the Circular is set out below:

" Notice of requisitioned General Meeting

On 24 July 2021, the Board of Block Energy PLC received a further Requisition Notice from Forest Nominees Limited (on behalf of G.P. (Jersey) Limited) ("GP Jersey"), requesting the Board to convene a General Meeting of Block Energy plc (the "Company") for the purpose of considering a resolution to commission an independent forensic investigation into the affairs of the Company (full text of the scope of this proposed resolution is set out below).

As a matter of company law, and, in particular, in accordance with and subject to the provisions of section 303 of the Companies Act 2006, the Board is required to convene a General Meeting following the receipt of valid requisition notices from Shareholders holding at least 5% of the Company's issued share capital.

As at the date of the Requisition Notice, Forest Nominees Limited disclosed that it was the holder of 31,308,000 ordinary shares in the Company, representing approximately 5.00% of the total voting rights of all members of the Company as at the date of the Requisition Notice. It is a requirement (under section 304 of the Companies Act 2006) that the Board calls a General Meeting within 21 days of the date of the Requisition Notice. The formal Notice of the General Meeting is set out on pages 9 and 10 of this document.

The Requisition Notice includes the following resolution to be considered and, if thought fit, approved at the General Meeting as an ordinary resolution ("Resolution"):

That the board of the directors of the Company (the "Board") commission an independent forensic investigation into the affairs of the Company which will:

1.  review all material transactions and arrangements entered into in the three years preceding the date of this resolution to which the Company or any of its subsidiaries or affiliates was directly or indirectly a party and to report on the terms of such transactions and arrangements and the ongoing implementation of such transactions and their commercial benefit to the Company;

2.  carry out a detailed analysis of the Company's general operational performance from a technical and commercial standpoint with a focus on:

a.  gas sales arrangements and spot sales of hydrocarbons;

b.  general approach to contracting of equipment, contractors and staff and their suitability to deliver the Company's drilling strategy;

c.  the Company's ongoing financial requirements and use of the proceeds of the December 2021 [sic] placing; and

d.  the Company's current ability to finance the well programme for which the proceeds of the placing were raised; and

3.  review the Company's corporate governance structures and approach to compliance with the regulatory framework to which the Company and Board are subject and to identify any systemic failures in corporate governance in the preceding three years by the Company's leadership including but not limited to:

a.  any failures to disclose information to the market in a timely fashion;

b.  any inappropriate trading of shares by Directors during close periods or otherwise;

c.  the circumstances surrounding the resignation of Dato Sandroshvilli [sic] and Chris Brown in short succession from the Board on or around 22 July 2021,

d.  Board dynamics and composition and the Board's compliance with the requirements of the QCA Corporate Governance Code which the Company has adopted,

and to report on any perceived non-compliance and/or shortcomings and to make recommendations as to how effective corporate governance practices can be adopted by the Company going forward.

For the purpose of carrying out such independent forensic investigation the Board shall retain one of the following firms: Deloitte, PwC, Ernst & Young [sic] and/or KPMG. The purpose of such forensic investigation is to determine if the transactions or arrangements entered into by the Company and the policies and systems adopted by the Board were carried out or implemented in the best interests of the Company and to the benefit of its shareholders or otherwise. The priority is ensuring the future success of the Company and to ensure that the Company understands and does not repeat past mistakes. The independent forensic investigator shall provide a written report detailing its findings. The Board shall promptly make available to the shareholders an un-redacted copy of the independent forensic investigator's report.

The purpose of this letter is to explain the impact that the actions of GP Jersey will have on the Company, why the Board strongly recommends that you should VOTE AGAINST the Resolution, and the action you need to take to vote.

G.P. (Jersey) Limited, as the beneficial owner of the 31,308,000 ordinary shares held by Forest Nominees Limited has not provided a statement to be circulated with this Notice ("Statement") outlining its position or explaining why the Resolution has been proposed. Nevertheless, in the event that any such Statement is received, the Company will comply with its obligation to circulate such Statement in accordance with the Companies Act 2006. Any such Statement and its contents will be reproduced as received and the Board will take no steps to verify its accuracy and will not in any way endorse the Statement or the statements or views contained in it.

Why Shareholders should vote AGAINST the Resolution:

Shareholders are strongly urged to vote against the Resolution proposed in the latest Requisition Notice from GP Jersey for the following reasons:

Ø Block Energy's operational and governance framework is, in the context of the Company's size and status as an AIM-quoted company, of an appropriate standard and adherence to this framework has been wrongly been called into question by GP Jersey.

Ø Time, effort and money should not be diverted from the Company's focus on creating further value for its Shareholders, particularly at this critical time in the current, potentially Company-transforming drilling campaign.

As was highlighted in the circular dated 30 July 2021 sent to Shareholders ahead of the general meeting held on 11 August 2021, at which the previous resolutions proposed by GP Jersey were defeated, the current Board and management team have a track record of delivering value since the Company's listing.  This includes net asset value having increased by over 200% from $9.2 million as of 30 June 2018 to $29.7 million as of 31 December 2020, and 2P reserves having increased by more than 40-fold over the same period, despite the impact of Covid-19. Furthermore, the Company has a clear strategy to unlock the full potential of the Company's significant asset portfolio in Georgia.

It is the opinion of the Board that the Requisition Notice was served with the intention of creating as much of a nuisance as possible for the Company. In particular, the Requisition Notice was received the day after the Company had posted its notice of a general meeting dated 23 July 2021 in respect of the first requisition notice received from GP Jersey. As Shareholders will be aware, that general meeting was held on 11 August 2021 and the two resolutions proposed by GP Jersey were rejected by Shareholders as shown in the table below:

Resolution	For	% For	Against	% Against
1. THAT Philip Dimmock be removed from office as director of the Company with immediate effect.	140,566,909	36.84%	240,980,994	63.16%
2. THAT Charles Valceschini be appointed as non-executive Chairman of the Company with immediate effect.	139,944,209	37.79%	230,388,805	62.21%

It is the view of the Board that the Resolution proposed in the Requisition Notice might be another attempt by GP Jersey, together with others (the "Shareholder Group"), to prepare for further personal attacks against certain members of the Board. The Board is of the view that the Resolution proposed is vexatious and accordingly that there is no obligation on the Board to call the General Meeting by virtue of section 303(5)(c) of the Companies Act 2006. The reasons for this are as follows:

1.  The Company has, pursuant to the circular posted on 30 July 2021 (the "Circular"), explained the position of the Company's directors on the statements by GP Jersey. In particular, and as specified in the Circular, the Company's Nominated Adviser, Spark Advisory Partners Limited, guides and advises the Company on its responsibilities to ensure compliance with the AIM regulatory regime and, each year, BDO audits the Company's accounts. The material transactions referred to in item number 1 of the Resolution have already been audited by the Company's auditor, BDO LLP. The matters referred to in item number 2 of the Resolution are kept under continuous review by the Board. The matters referred to in item number 3 of the Resolution are continuously monitored by the Company's Nominated Adviser, Spark Advisory Partners Limited. As such, the forensic investigation proposed in the Requisition Notice is not required and serves no proper purpose.

2.  Had GP Jersey truly wished to propose the resolution included in the Requisition Notice for bona fide reasons, the Directors believe they would have done so in the first s.303 notice served on the Company on 2 July 2021. The Board has not identified any particular material new information which arose between 2 July 2021 and 23 July 2021 and which would, in the Board's opinion, explain GP Jersey's approach in requesting a second general meeting of the Company. The only matter of substance was the resignations of Chris Brown and Dato Sandroshvili, but any suggestion that these resignations are justification for requiring a full-scale forensic audit into the affairs of the Company over the previous 3 years would be incorrect.

3.  The Company has approached the firms specified in the proposed resolution to obtain quotes for the forensic report which would be required if the resolution were passed. One of these firms has stated to the Company in writing that "Based on our experience, we anticipate the cost of an independent forensic investigation to meet the scope as presently envisaged could exceed £2 million (excluding VAT and expenses)". In addition, due to the nature of the request and scope of work, they would also seek an upfront payment on account of 50% of their estimated fee (£1 million), payable on the execution of an engagement letter. The expenditure of around £2 million of Shareholders' funds on GP Jersey's proposed forensic investigation would clearly not be in the best interests of the Company and would be burdensome. The Company's currently has $4.0 million in cash. If the Company were to be compelled to perform the forensic investigation and incur a liability of £2 million (approximately $2.8 million), even if the current well is completed on budget, the current two-well programme could not be completed without the Company returning to the capital markets for additional funds.

In relation to the above, the Company has, through its solicitors, written to GP Jersey inviting them to withdraw the Requisition Notice. Unfortunately, GP Jersey has refused this invitation.

Whilst the Board is confident that its position - that the Requisition Notice is invalid pursuant to the Companies Act - is correct, the Board wishes to avoid any costly and protracted court process that might follow if it were to challenge the Requisition Notice's validity through formal legal channels. The Board wishes to continue operating in an open and transparent manner and, accordingly, the Board has decided to call the General Meeting to allow Shareholders to vote on the Resolution proposed, and with the hope of drawing a line under the actions of the Shareholder Group and allowing the Company to fully focus on its operational priorities. If Shareholders determine that the forensic investigation called for by GP Jersey is a better use of Shareholder funds than the drilling programme, which is currently ongoing, they may wish to vote in favour of the Resolution. It is the Board's view that a forensic investigation is not merited, and that such funds would be better spent on furthering the operations of the Company in order to increase value for all Shareholders rather than to advance the agenda of the Shareholder Group.

For the reasons noted above, the Board believes that the Resolution is not in the best interests of the Shareholders as a whole. The Board therefore strongly recommends that Shareholders vote against the Resolution.

The General Meeting

Before the General Meeting

Please register your proxy vote by completing and signing the Form of Proxy accompanying this Notice in accordance with the instructions set out thereon and returning the Form of Proxy to Share Registrars Limited, by email to [e-mail], by post or by hand (during normal business hours and by appointment only) at the following address: The Courtyard, 17 West Street, Farnham, Surrey, GU9 7DR as soon as possible, but in any event so as to be received by no later than 48 hours (excluding non-Business Days) before the appointed time for the General Meeting (being 10:00 a.m. on 1 September 2021). Unless the Form of Proxy is returned by the relevant time specified in the foregoing sentence, or in the event that the General Meeting is adjourned, not later than 48 hours (excluding non-Business Days) before the time fixed for the holding of the adjourned meeting, they will be invalid .

Shareholders who hold their shares through CREST and who wish to appoint a proxy for the General Meeting or any adjournment(s) thereof may do so by using the CREST proxy voting service in accordance with the procedures set out in the CREST manual. CREST personal members or other CREST sponsored members, and those CREST members who have appointed a voting service provider, should refer to that CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf. Proxies submitted via CREST must be received by the Registrar by no later than 48 hours (excluding non-Business Days) before the appointed time for the relevant Meeting (being 10:00 a.m. on 1 September 2021).

Accordingly, your proxy vote, whether your shares are held through CREST or otherwise, must be submitted by no later than 10:00 a.m. on 27 August 2021.

EVERY SHAREHOLDER'S VOTE IS IMPORTANT - PLEASE COMPLETE AND RETURN YOUR FORM OF PROXY AS SOON AS POSSIBLE.

On the day of the General Meeting

The General Meeting takes place at 10:00 a.m. on 1 September 2021 at Landmark Office Space, 33 Cavendish Square, London W1G 0PW.

Action to be taken by the Shareholders

Shareholders will find enclosed with this letter a Form of Proxy for use at the General Meeting. The Form of Proxy should be completed and returned in accordance with the instructions printed on it so as to arrive at Share Registrars Limited, by email to [e-mail], by post or by hand (during normal business hours and by appointment only) at the following address: The Courtyard, 17 West Street, Farnham, Surrey, GU9 7DR, United Kingdom as soon as possible and in any event not later than 10:00 a.m. on 31 August 2021.

Shareholders who hold their shares through CREST and who wish to appoint a proxy for the General Meeting or any adjournment(s) thereof may do so by using the CREST proxy voting service in accordance with the procedures set out in the CREST manual. CREST personal members or other CREST sponsored members, and those CREST members who have appointed a voting service provider, should refer to that CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf. Proxies submitted via CREST must be received by the Registrar by no later than 10:00 a.m. on 31 August 2021.

Recommendation

For the reasons noted above, the directors unanimously consider that the Resolution is not in the best interests of the Company and its Shareholders and, therefore, are recommending that Shareholders VOTE AGAINST the Resolution to be proposed at the General Meeting.

The Directors who will be voting against the Resolution in respect of their own beneficial holdings hold 20,418,530 ordinary shares in aggregate, representing approximately 3.26% of the issued share capital of the Company at the date of this document.

Yours faithfully

PHILIP DIMMOCK

Chairman"

The general meeting will be held at 10:00 a.m. on 1 September 2021 at Landmark Office Space, 33 Cavendish Square, London W1G 0PW.

The result of the general meeting will be announced after its conclusion and published on the Company's website.

**ENDS**

For further information please visit http://www.blockenergy.co.uk/ or contact:

Paul Haywood (Chief Executive Officer)	Block Energy plc	Tel: [phone]
Neil Baldwin (Nominated Adviser)	Spark Advisory Partners Limited	Tel: [phone]
Peter Krens (Corporate Broker)	Tennyson Securities	Tel: [phone]
Mark Antelme Philip Dennis (Financial PR Adviser)	Celicourt Communications	Tel: [phone]

Notes to editors

Block Energy plc is an AIM-quoted independent oil and gas company focused on production and development in Georgia, applying innovative technology to realise the full potential of previously discovered fields.

Block has a 100% working interest in Georgian onshore licence blocks IX and XI^B. Licence block XI^B is Georgia's most productive block, with 2P oil and gas reserves of 64 MMboe, which is comprised 2P oil reserves of 36 MMbbls and 2P gas reserves of 28 MMboe (Source: CPR Bayphase Limited: 1 July 2015)and historic production of over 180 MMbbls of oil from the Middle Eocene, peaking in the mid-1980s at 67,000 bopd.

The Company has a 100% working interest in the highly prospective West Rustavi onshore oil and gas field with multiple wells that have tested oil and gas from a range of geological horizons. The field has so far produced 50 Mbbls of light sweet crude and has 0.9 MMbbls of gross 2P oil reserves in the Middle Eocene. It also has 38 MMbbls of gross unrisked 2C contingent resources of oil and 608 Bcf of gross unrisked 2C contingent resources of gas in the Middle, Upper and Lower Eocene formations (Source: CPR Gustavson Associates: 1 January 2018).

Block also holds 100% and 90% working interests respectively in the onshore oil producing Norio and Satskhenisi fields.

The Company offers a clear entry point for investors to gain exposure to Georgia's growing economy and the strong regional demand for oil and gas.

Glossary

1.  bbls: barrels. A barrel is 35 imperial gallons.

2.  boe: barrels of oil equivalent.

3.  bopd: barrels of oil per day.

4.  Mbbls: thousand barrels.

5.  MMbbls: million barrels.

6.  MMboe: million barrels of oil equivalent.

7.  Bcf: billion cubic feet.

 

END

 

 

NOGDKNBNQBKDNFD