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Bowleven – did Artemis plunge the knife before bailing out to Crown and if so where is the TR-1?

By Nigel Somerville, the Deputy Sheriff of AIM | Thursday 9 March 2017

Disclosure: I own shares in one or more of the stocks mentioned. 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.

A brief line in an announcement by Crown Ocean has caught my eye in the latest twist in the battle to remove the useless board of AIM-listed Bowleven (BLVN). The board’s supposedly flagship farm-out transaction, with which CEO Kevin Hart expressed pleasure, seems to me have placed a maximum valuation of around $25 million on the company’s $100 million spent on Bomono. But I wonder whether major institution Artemis has sold out of the 14 million shares the market was told it held on Monday. If so, where is the TR-1, and did Artemis vote the shares against the board ahead of selling them to Crown Ocean?

In some way you might think Artemis a pretty old-fashioned investment house in that it would be unseemly of it to get its hands dirty by getting too involved in controversy. So one might take the view that either it would support the board of Bowleven or simply sell out, rather than get involved in mucky attempts at unseating the entire board.

On 6 March (Monday) at 2.21pm Bowleven released a TR-1 RNS showing that Crown Ocean had increased its holding on 1 March from 52,640,099 shares to 56,390,099 shares – an increase of 3.75 million.

At 4.45pm came another, showing that Artemis had reduced its holding on 1 March (notifying the company on 2 March, Thursday of last week which means that Bowleven sat on this information through at least part of Thursday, all of Friday and until after-hours on Monday) from 17,875 million shares to 14 million shares – a disposal of 3.875 million shares. Did Crown Ocean take all but a handful of that equity off Artemis’ hands?

Then, at 5.43pm (truly no-one-is-watching o’clock) another TR-1 RNS was slipped out showing that Crown Ocean had on that day further increased its holding from 56,390,099 shares to 70,560,000 shares – an increase of 14,169,901 shares, and a shade over Artemis’ remaining holding.

Since then we have not had a notification by RNS as to whether Artemis did indeed bail out of its remaining 14 million shares. But I suggest that the sheer size of the holding acquired would have been very difficult to acquire by simply buying in the market. I suggest that Crown did indeed buy out Artemis.

Why has there been no TR-1 RNS yet? Is Artemis sitting on information of a disposal of 14 million shares, or is Bowleven sitting on it?

Or perhaps Artemis is still holding those shares. I very much doubt it, however, and I think a clarification is in order. It certainly would look very poor form if it were to emerge that Bowleven was informed of a disposal of 14 million shares by Artemis at a very early stage and did not pass this notification on to the market quickly, during the week in which proxy votes for the sack-the-board EGM are due.

Now we come to a statement released via RNS by Crown Ocean, again on Monday. It was issued at 4.32pm, saying that Crown Ocean  

….has acquired additional shares in the Company and is now the beneficial owner of 70,560,000 ordinary shares in Bowleven, equal to 22.0% of the outstanding issued ordinary share capital of the Company….. These additional shares are being voted by proxy in favour of the resolutions to be put to the General Meeting of Bowleven shareholders to be held in Edinburgh on Tuesday, 14 March. Prior to the purchase of these additional shares, the shares already beneficially owned were voted by proxy in favour of the resolutions last Friday, 3 March 2017.

So this is the additional tranche of shares disclosed in the TR-1 RNS issued by Bowleven a little over an hour later, which showed that the transaction date was that very day, 6th March. Naturally it is impossible that the release of the statement by Crown forced Bowleven to release the respective TR-1.

But what interests me is this: the shares previously owned by Crown had been voted by proxy against the board of Bowleven on 3 March. That includes the additional line of shares which looks to have been acquired from Artemis on 1 March.

Now it could be that I am making 2+2 equal to more than four, but bearing in mind settlement timing (T+2) that would suggest that Crown would not have settled stock to vote with until yesterday – 8 March.

And we also know that the deadline for the company receiving proxy votes in the sack-the-board EGM is tomorrow.

Would Crown be sure that it could vote the stock, bearing in mind the timetable? Yet it has told us that these additional shares are being voted….in favour of the resolutions (to sack the board).

And that leads one to wonder whether the shares had already been voted before being acquired by Crown.

So, Bowleven: are you sitting on information that Artemis has bailed out of the 14 million shares the market was notified that it held on Monday? With proxy voting deadline of tomorrow, some people might consider the fate of 14 million shares held by a major and well-respected investment house to be pertinent.

And did Artemis, as a last act before dumping, vote the shares against the incumbent board?

Meanwhile, with Crown now holding 22% of the company and the boardroom holding Sweet Fanny Adams, I think that Kevin Hart and his crew are toast.

With proxy votes arriving at the company by tomorrow, I rather fancy that the writing will be on the wall over the weekend, at which point Mr Hart will have one last chance to save face by walking before he is prodded off the edge of the plank with a rolled-up P45 next Tuesday at the EGM.

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