After the market closed Bowleven announced that its second major shareholder, Artemis Investment Management, today sold its remaining stake in the company to Crown Ocean. Thanks to the mobilisation of the retail vote, the board was already dead and buried at the forthcoming EGM vote. This sale this wasn’t so much a final nail in the coffin but more the elaborate decoration of a carefully crafted headstone. If he doesn’t resign, Kevin Hart is going to receive his long overdue P45. Bowleven is about to experience a radical overhaul of its business. There is much for shareholders to celebrate.
If Kevin Hart and the board were going to have any chance of surviving the EGM they needed Artemis to vote against the resolutions. Judging by the dates on the TR1s it seems that Hart and the board knew last Wednesday that Artemis was not going to support them. Artemis sold over 1/3 of its stake on 01 March and notified Bowleven of this on 02 March. On 03 March, Bowleven published Glass Lewis’ voting recommendation for shareholders to vote against all resolutions. Shareholders will need to make their own minds up why Bowleven’s board chose to delay the publication of Artemis’ first reduction of holdings RNS.
But what of Artemis’ decision to sell?
Some might try to portray this as a negative, but the reality is this investment was both an annoyance and a source of potential embarrassment to Artemis. Recognised for its traditional core values, Artemis is a fund whose policy is to support management and avoid controversy. Its investment in Bowleven was a minuscule holding, compared to the billions it has under management. Thanks to the sustained abysmal performance of Hart and his fellow directors in running the company, they placed Artemis in an impossible position.
Despite the misguided advice of several proxy advisors there was simply no way professional or sophisticated investors in Bowleven could vote in favour of the current board. Any concerns about the independence of Crown Ocean’s nominations were trumped by the board’s dreadful stewardship of the company. The Bomono “farm out” was just the latest travesty the current directors have inflicted on the company.
Given that an abstention at the EGM would have been interpreted as a tacit move against management, Artemis’ only choice was to sell.
As for the sale, it looks like Crown Ocean bought the 14,000,000 shares at 34p per share. According to today’s trades this transaction was executed at 12.04pm.
It will be interesting to see how the market reacts to this news tomorrow, but Crown Ocean’s apparent preparedness to spend £4.76million at 34p per share should act as a source of encouragement. It seems unlikely that Crown Ocean has bought these shares to win the vote. It didn’t need to. Therefore the obvious conclusion to jump to is that the Monaco-based fund still sees sufficient value in Bowleven to justify the risk.