Sunday, 27 October 2013

Metgasco's smaller shareholders remain unimpressed with the current board

On a Hotcopper forum this month:

Fellow shareholders, my disillusion with our current board crystallized with its total capitulation on our NSW assets, withdrawal from Northern NSW, closure of operations both conventional and CSG, appointment of another "Esso man" to our board ( the Esso million dollar retirement fund ) to explore for opportunities in other jurisdictions.
Some how two days following notice from the Boards stylised " minority shareholder" group; our Board have an enema, announcing that we may return to NSW and low and behold we are going to revisit Rosella some time in the future!!!!
Demonstrating much nimbleness, and a further epiphany our CEO in a desperate bid for position preservation, has back flipped, and dispute all previous justification on his proposed excessive option allocation, now announces "in the companies interest" he intends to decline this offer from our remuneration committee of which he is not a member ( given the number of company employees, maybe the tea lady is committee chairperson!)
IMHO we have witnessed another "to hot in the kitchen moment"
Time to pass the baton Mr Henderson, thank you for trashing our brand.


There is a more fundamental problem here. The current Board does not consist of some fly by night bushranger types. In June when they awarded these shares, they must have seriously believed that $0.14 was a significant hurdle. So much for faith in the Company's assets or a viable strategic plan
The real problem is that the current Board does not understand the business and they take too long to come up to speed.
This cancellation of the share issue to Peter Henderson comes almost three months after it was awarded, and just days before voting for the AGM effectively closes.
I see it as just one more example of on the run policies and thought bubbles that predominate their thinking.
We can also see that they are now in panic mode, desperately trying to talk to all the shareholders when they basically ignored them for the past twelve months since the last capital raising.
We have to get a change at the Board level.


Dear Nick and Peter,

As a shareholder with approximately $000,000 invested in your company for many years, (eventually refused to commit more), I have become as infuriated as I have been appalled at the seeming lack of finesse, judgement and street smarts employed by officers of the company who were entrusted to utilise my capital to the best of their abilities.

Over the last eight months or so, in some instances longer, I have been reminded of a retreating rabble of an army, employing slash and burn tactics akin to cutting off your noses to spite your faces, (OUR faces if you don’t mind).

I am concerned your actions may have severely damaged the Metgasco brand, setting us back an inestimable time in this industry. Until recently when it became clear some of your “material” had begun to be written professionally, (possibly for an additional fee), any releases from the company were irrational, very, very contradictory, lacking in conviction and frankly embarrassing to have to endure.

I consider your five to midnight decision to now incur further expenditure in a spurious act of self-justification selfish and desperate. I refer to the engaging by the Board of a firm to canvas shareholders who have been badly LET DOWN, in the hope of securing your tenure for another term.

I have now decided to seek my own advice as to the legal appropriateness of this latest tactic, coming so close to your likely removal from the duties you have been entrusted to. 

In that light, you should consider the wisdom of continuing to spend shareholder funds on non-core tasks such as this, in such a small company.

The roles you have occupied thus far, (of course Peter is employed, by those WE appointed), are conveyed by privilege; NOT as your right. We grant them, and we take them away if necessary.

I believe you have seriously under-estimated the combined experience, vision, and patience of those you serve. This has to come at a cost, which will have to be borne by you.

Yours sincerely,

Xxx Xxxxx (joint shareholder)

Pretty interesting tactic from the Company to include a share price chart. This is something that I thought the proposed new Board members would rely heavily on. It is for all the world like picking at a scab and reminds all holders of their disappointments.
Since Peter Henderson’s appointment as MD was announced, the share price has fallen from $0.55 to a minimum of $0.049. This is even worse than his stint at Nido where the share price only halved during his time as MD.
If you read the notes on the chart, every price movement except the suspension, even the positive ones are attributed to external factors. So in the two years covered, what exactly did the Board and management do? It reminds me very much of the dictum that if you want a change in the outcome you need to change the way you are doing it. And our current Board and management seem to be hell bent on justifying the way they have done it before.
It is more instructive to look at the actual price changes rather than try to decipher the nebulous comments appended to the chart.
Reading the chart you get the impression that the share price drop in early 2013 is mainly all due to the announcement of the 2 km exclusion zones. But the share price history tells quite a different story. The NSW Government announced the 2km exclusion zones on 19th February. The same day the company released a very short two paragraph statement including the following:
“The details of these changes are not yet clear but they could have a significant impact on Metgasco’s Northern Rivers CSG operations.”
True shoot from the hip and think later approach that we have come to expect from our Board i.e. we have no idea but it might really hurt us. We now know that it is likely to have little or no effect on MEL.
Well quite predictably the share price fell and on that day it fell 28%, but how much was due to the Government’s announcement and how much was due to the Company’s shoot from the hip announcement, no one can tell.
However three weeks later the Company did it all on its own and announced the suspension of activities around Casino. This resulted in a 22% drop in the share price.
So all of this fall was the Government’s fault – not a chance. And it does not even attempt to explain the fall from the $0.20 at the time of the capital raising in September 2012 to the $0.145 at the time of the Government’s announcement.
Then we look at the recent share price strengthening which the Company attributes all to the results of the Federal election. Well the Federal election was on September 7th and the Company released an announcement to the market of September 9th implying that nothing had changed. But the share price leap (doubling over three days) did not occur until September 18th on very high turnover.
11 days after the result of the election was known. Market a bit slow to catch on – again I very much doubt it. What else could have triggered the jump?
We now know that the shareholding group lodged their formal notices for replacement Board members on September 27th, nine days after the jump in price. We also now know that the Board invited the proposed new Directors to meet with them on September 27th. Obviously this invitation was issued some time before the 27th. So the question becomes when did the Board actually know that there was likely to be a challenge?
It appears as if the Board might have rushed out the Notice of AGM on Friday 27th in an attempt to try to head off the challenge. So what and how much did the Board know on September 18th.
But I guess the most important take away for the share price chart and notes, is that the Company believes every share price movement good and bad, bar for the suspension, is due to the actions of someone else. So what has the current Board and management achieved for shareholders in two years?
Time for fresh blood – you betcha.


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