Faroe Petroleum sees off Norwegians’ boardroom power grab

NORTH Sea oil producer Faroe Petroleum has seen off a boardroom power grab by its largest shareholder, which retreated from plans to replace two directors with its own executives.

Faroe was braced to take on Norwegian oil giant DNO in a showdown over its calls to install Bijan Mossavarrahmani, DNO’S chairman, and Bjorn Dale, DNO’S managing director, at the boardroom table.

DNO said it had hoped to raise “concerns and dismay about the wider governance culture and shareholder value strategies”, but had chosen to withdraw its call for an extraordinary shareholder meeting in the wake of Faroe’s “increasingly hostile” public response.

Faroe described the plan as “wholly self-serving” and “part of an undisclosed strategy on DNO and Mr Mossavar-rahmani’s part to try [to] gain control of Faroe’s business without making an offer to all shareholders at an appropriate premium”.

Following DNO’S retreat, Faroe said it was pleased to have avoided “a costly and time-consuming” squabble over the appointments, which “would ultimately have been soundly defeated”.

DNO said it still hopes “Faroe Petroleum’s directors will initiate a constructive dialogue with DNO, as they should with any large shareholder”.

However, analysts at Panmure Gordon warned that its spat has set “an aggressive tone for its relationship with Faroe”.

Analysts at Cantor Fitzgerald added that it was “borderline hysterical” for DNO to question the governance practises of Faroe, given DNO “is considered to be operated as the personal fiefdom of its executive chairman”.

Faroe has been on alert since earlier this year, when DNO quickly grew its stake in the Aim-listed oil group to more than 28pc, close to the threshold at which it would be required to make a takeover offer for the whole company.

DNO bought a 15.37pc share in the company from Israel’s Delek for £7m before approaching Faroe’s existing shareholders to buy a further 10pc at the same price of 125p a share. It snapped up an extra 2.32pc of the company’s outstanding shares for the same price.

At the time, DNO did not seek a seat on the board and was forced to publicly quash speculation that it would swallow the Aberdeen-based firm.

Shares in Faroe closed down 1.7pc at 150.2p yesterday.