Empire Oil & Gas has painted ERM Power's planned board spill as an attempted takeover by stealth that threatens the new producer's exploration plans.
Commenting on behalf of directors yesterday, Empire managing director Craig Marshall said ERM's surprise move to dump the board was "an opportunistic attempt to take control without making a formal offer . . . and without paying a premium".
The comments were Empire's first since ERM requestioned a shareholders meeting of the company last Friday with the aim of spilling three of its four directors, including Mr Marshall.
ERM's grievances include Empire's management of their new $38.7 million Red Gully gas and condensate plant near Gingin, which was commissioned over budget.
But Mr Marshall said in a statement yesterday that with the "hard work" of building and commissioning Red Gully out of the way and the plant now producing, it was "disappointing" ERM had not raised its concerns with Empire before making its move.
He also said the board assault would "likely" delay Empire's planned drilling programs across the Perth Basin and jeopardise a farm-out campaign now being promoted with the aid of Macquarie Capital.
The initiatives, together with Red Gully's revenues, provided "a solid platform for future shareholder returns and an increase in Empire's share price", which is languishing at 1.6¢.
Following recent buying, ERM has emerged as Empire's biggest shareholder, with 10 per cent.
Assuming the spill is successful, it would appoint two nominees, including former Western Power boss Tony Iannello. Over the following three to six months, the new board would undertake a review of Empire and hire a new chief executive and two independent directors, one of whom would take on the chairmanship.
The three targeted directors control only about one per cent of Empire in their own right, before options. But they nonetheless easily repelled another spill by dissident investors last year.
According to Empire's annual report, released on Monday, the board has put Mr Marshall on a new five-year contract, including a base salary of $360,000 and short and long-term bonuses. He was previously on a consultancy.