Scirocco Energy has triumphed over shareholders seeking a rethink on the company’s direction and its sale of its Tanzanian asset.
The company held a general meeting today, with five resolutions up for a vote. Scirocco advised shareholders to vote against them and 61.3% backed the company’s call, while 38.7% voted for the resolutions.
Scirocco non-executive chairman Alastair Ferguson said the vote demonstrated that most shareholders backed the board’s strategy.
“That said, we regret the lack of strategic alignment with certain shareholders and will continue to make every effort to engage constructively with them going forward,” he said. “This meeting has given the Board a greater understanding of their issues and we commit to working more intently to address them in order to draw a line under these matters.”
Scirocco, he said, expects to realise value from its plans in the long term with a “proven, low-risk strategy”. Demonstration of the company’s plans came this morning, with Scirocco providing an update on an anaerobic digestion plant in Northern Ireland.
Scirocco set out an energy transition plan in 2020 in order to drive returns for shareholders.
The resolutions criticised the way in which the pivot had played out. Investing in anaerobic digestion plants has failed to convince the market, with “poor share price and also the poor returns to date, complex ownership structure and high fees involved”.
Rather, the dissident shareholders said, Scirocco should invest in “more established medium size enterprises which demonstrate clear income generation and return to shareholders”.
Criticism of the move into the European energy transition space also matched with complaints about the exit from the Ruvuma asset.
Wentworth Resources agreed to buy Scirocco’s stake in June this year, for $16 million. ARA Petroleum Tanzania (APT), in August, then said it would pre-empt the sale, but on the same terms.
One of the resolutions called for Scirocco’s directors to provide an audit trail of revenue from 2018. It also questioned the need for external funding around Ruvuma.
Scirocco said funding from Prolific Basins was essential to maintain its Ruvuma interest until the sale was completed.
APT has provided $1.6 million to Scirocco as a loan for the Ruvuma asset. The companies hope to complete the deal by December 31. Given this payment, Scirocco has begun paying down Prolific Basins in a way that should avoid any share dilution.
Another of the resolutions criticised Scirocco’s use of Gneiss Energy.