Bowleven – an ill-judged “provisional response”

This morning’s “provisional response” from Bowleven to Crown Ocean’s proposed resolutions smacks of desperation. Unable to defend its track record or cite any evidence that it has what it takes to deliver its strategy, the board has resorted to mud slinging. This is unfortunate, but at some point one side was going to start doing it. Sadly for Bowleven’s directors’ the mud they’ve chosen to sling is of the amateurish, non-stick variety. Here’s why.

Whoever wrote Bowleven’s RNS would have done well to read the Takeover Panel’s Practice Statement 26, helpfully linked to by this site here, before launching into such an ill-judged rant.

Practice Statement 26 describes in detail safeguards that the Takeover Panel has in place to ensure that minority shareholders in companies cannot hide behind a false flag of “shareholder activism” to seize control. This is an important aspect of the Takeover Code and is tightly policed by the Takeover Panel.

Interestingly Bowleven’s announcement this morning contained no mention of the Takeover Code nor of reporting Crown Ocean to the Takeover Panel, yet still the board felt at liberty to claim;

“COC intends to remove the existing Board and appoint their own representatives, placing the management of the company in the control of a single minority shareholder, with no remaining independent directors representing the interests of shareholders” 

Why did Bowleven’s Nomad allow this?

The Takeover Panel is perhaps the most efficient and determined of London’s regulatory bodies. On receiving a complaint about potential rule breaches, especially those that might trigger a Rule 9 mandatory bid, the Takeover panel has a reputation for acting swiftly.

Under Rule 9 the Takeover Panel can demand that a shareholder in a certain company must make a bid for that company if specific tests are met. Section 1.3 of Practice Statement 26 describes these tests, but in summary if the Takeover Panel rules that Crown Ocean is seeking to gain control of Bowleven’s board then it would require Crown Ocean to make a mandatory bid for the whole company. The price of such a mandatory bid would be at the highest price Crown Ocean paid for Bowleven stock over the last 12 months.

Taking over Bowleven does not appear to be part of Crown Ocean’s strategy. In its RNS a fortnight ago it claimed that the directors it had nominated are independent. It is inconceivable that the Takeover Panel is not aware of what is happening at Bowleven and has not at least cast an eye over Crown Ocean’s proposal.

Since Bowleven’s directors are apparently so concerned that Crown Ocean is attempting to take control of the company, have they reported it to the Takeover Panel?

If so, what was the response?

If not, why not?

These are questions I will put to the company today. I will publish the response here.