re: Ann: Requisition for Shareholders Meeting...
Surndy, I think you do well to be concerned.
Iam posting here as a non-holder. I had recently decided to stop posting on HC and close my account, but before I get to that, I thought I might vent my spleen on what I see happening all to often with spec O&G stocks.
It bamboozles me that ppl who have no understanding of the O&G industry sit in their armchairs and pontificate on the performance of highly experienced and capable directors. REMEMBER, they are not measuring directors' performance to get the job done and adding value to the business. Rather, they measure performance based on the sp and directors' ability to enhance market sentiment.
It is true, that directors with strengths in geology and other technical aspects of O&G, do not have shareholder relations as their strong suit. Often time they are nose down and bum up, concentrating on technical aspects and operational matters. They consider the constant communication from shareholers who ask stupid questions and trying to tell them what to do as a pain in the neck and this is reflected in the confusing and uninformative ASX anns.
The above problen is accaserbated when a small cap moves from exploration to production. The focus of the market then concentrates on the revenue activity to the exclusion of all other value in the business. If the particular activity is not an outatanding success, market sentiment drops like a stone and sp hits the deck, with all sorts of recriminations against directors regarding incompetence.
A company such as Key remains very dependent on capital funding for further aquisition and development of projects. O&G ventures are risky and very expensive in terms of drilling and completing wells at best they require a substantial conduit of cash to keep operations happening.
When directors have got themselves in the corner of dwindling market sentiment and low sp, a degree of panic sets in because capital funding drys up. They are forced to use the 15% statutory allowance of placements to sophisticated recipients on a more regular basis just to remain financially viable - further reducing market sentiment and resulting in moves such as witnessed here to remove them because of percieved incompetence.
I you were to assess individual performance of directors on the basis of of their technical strengths - why they were engaged in the first place, you would perhaps uncover enviable track records in value adding for the benefit of shareholders. TRUE they are hopless market sentiment managers and consequently are offside because they have gotten the company in the situation where funds are difficult to acquire, but should that be the measure of competence, or could there be a different solution such as appointment of someone who can deal with that aspect?
In any event the actions of a number of holders to remove directors who may well have done an outstanding job in accordance with their strengths, will come back to bite. It is no wonder that the two most qualified directors decided to walk. From their perspective, they don't need the heat after doing their best as they see it and they are of course concerned with the future ability of Key to acquire ongoing substantial funding. They understand they have failed on that front, but cannot workout that their skills were not enough and that they would have perhaps done better if they had political skills instead - then shareholders would be happy, plenty of funding available and Key sliding into the long term hole - where I suggest things will go from here i.e. technical experts move out and slick salesmen move in - WELL DONE!
BUT not all is done. Once directors are in, they are very difficullt to get out. Normally the board holds the proxy of all shares which their owners are not utilising as a vote. I don;t think that directors would have been removed if they did not want to go - they would have retained enough proxies to hold their position.
The best outcome for Key from here is that current directors find the replacements and use their proxies to get them in. An introduction of vested interests will not serve the value of Key in the long term - if that is the case with those who the interest group support.
Whoever ends up with the job, they will have to spruce up their slills on managing market sentiment. If they are unable to return focus to underlying value - which is considerable, and keep shareholders happy with good clear unambiguous anns this company will have to sell off the proverbial farm to survive.
I hope it will all come together for you - there is too much to lose here - underlying value in assets and prospects is fantastic and it would be a pity to see it destroyed by a bunch of misdirected minority of shareholders, getting rid of guys who can do the job but get kicked out because they aren't good salesmen.
Although long winded, I hope some of the above insights are of some use. I wish all holders good luck with the future on this one.
Cheers, W.
KEY Price at posting:
3.7¢ Sentiment: None Disclosure: Not Held
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