Boardroom Coup at DNO Fuels Bid Speculation

Norwegian investor Berge Gerdt Larsen was booted out as chairman of DNO International on Thursday, in a boardroom coup led by majority shareholder RAK Petroleum.

RAK chief executive, Bijan Mossavar-Rahmani (pictured), was voted in as new chairman at the Norwegian independent’s annual general meeting in Oslo, after the Middle East shareholder disclosed its plan to replace part of the DNO board just half-an-hour before the meeting.

United Arab Emirates-based oil and gas producer RAK increased its stake in DNO to 30% in April last year and the latest move by Mossavar-Rahmani suggests he may be positioning his company for a possible takeover of DNO, which mainly operates in Kurdistan and Yemen.

Mossavar-Rahmani is reported to have told Bloomberg News today that a merger of the two companies is a possibility.

“DNO International has a solid foundation in assets and importantly, in people. We believed this as we acquired our large position in the company and we believe it today as we take a more active role, in collaboration with shareholders, directors and management, to stabilise DNO International and then drive it to realise its full potential,” he said in a statement issued after the AGM.

However, in an implied criticism of his ousted predecessor, he emphasized the need to bring best practices to the company in terms of governance, transparency, accountability, cost control and regulatory compliance, while improving its relationships with host governments.

At today’s AGM, shareholders voted 78.18% in favour of the new board with Mossavar-Rahmani at the helm, with 21.82% against, TDN Finans reported. However, Gerdt Larsen complained that 61% of shareholders were not represented at the meeting.

As well as the RAK boss, the board now comprises deputy chairman Gunnar Hirsti and directors Marit Instanes and Shelley Watson, who were all re-elected, with Karen Sund, head of Oslo-based consultancy Sund Energy, elected as the only new independent director.

First Securities analyst Teodor Sveen Nilsen told Reuters that the boardroom switch did not alter his view of DNO's prospects.

"It's not unnatural that the largest owner, RAK, has the board chairmanship, but this could revive speculation about a RAK offer to buy DNO."

At last year's annual meeting DNO shareholders elected two board members proposed by RAK, including RAK board member and former U.S. ambassador to Iraq Zalmay Khalilzad, who subsequently declined to serve.

Three months ago Mossavar-Rahmini took the seat that had been designated for Khalilzad.

(Sources: UpstreamOnline, Reuters)

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