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Is M&G preparing a not so silent boardroom assassination of Todd Kozel?

By Ben Turney | Friday 27 June 2014


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.


As the market works itself up into a lather about the prospect of a bid for Gulf Keystone Petroleum (GKP), the significance of Wednesday’s events appear to have been missed by most shareholders. The headline news was Todd Kozel’s retirement as CEO of the company and his plan to remain as an executive director. The assumption appears to be Mr Kozel will see his wish granted in the vote held on his reappointment, at the AGM on July 17th. I’m not so sure. The departure of three of the four non-executive directors, whom M&G Investment Mgt managed to get appointed to Gulf’s board immediately before the last AGM, surely signals an escalation in the boardroom conflict that has plagued Gulf for too long. And now M&G is no longer playing nice...

Last summer, M&G issued this public statement to voice its disquiet over the corporate governance of Gulf. This prompted a terse RNS response from Gulf’s board. However, within a few weeks the board caved into M&G’s demand, when it became clear the long-established investment firm had sufficient shareholder support to vote against the various resolutions of that year’s AGM.

Twelve months later and a Cold War has clearly raged behind the scenes. There has obviously not been enough progress in setting Gulf on a path to better and more accountable corporate governance, so it now looks like M&G has decided that actions speak louder than words. If M&G was really satisfied with the state of Gulf’s executive management then why have three of its four representatives left, immediately before the AGM?

About the only reason I’ve been able to make out why Mr Kozel has managed to cling onto his position at Gulf, for as long as he has, is the claim of the importance of his personal contacts within the Kurdish Regional Government (the KRG). I’ve never bought this rationale. The reality is that Daisy the Cow could be CEO of Gulf and I’m sure the Kurds would be happy to work with her. The Shaikan field is of such strategic regional importance that it makes sense the various stakeholders’ interests are sufficiently aligned to ensure cooperation. Assuming that Mr Kozel receives the Order of the Boot in a few weeks time, his Kurdish friends will no doubt be jolly upset. That is, until they wake up the next morning and realise life goes on.

Resolution 4 of the AGM “proposes the re-appointment of Mr Kozel as a Director of the Company”. It seems impossible to believe that M&G, with its 5.4% stake in the company, will vote in favour of this. If M&G votes against Mr Kozel’s re-appointment, then it also seems likely that Capital Research & Mgt, which holds 5.8% of Gulf, will follow suit. If I am correct about the change in stance of M&G towards its handling of relations with Gulf’s board, then I wouldn’t be at all surprised if the investment firm has also rallied the support of other significant shareholders to ensure the coup is a success.

Given Mr Kozel’s standing among Gulf’s private shareholders (errrr... which might even be below that of a certain Mr Winnifrith’s!!!), those that do bother to vote in a few week, will probably just swell the insurgency’s numbers.  

All in all it looks like Mr Kozel’s days are numbered... to twenty one, to be precise.


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