<<< By Jeffrey Jones
CALGARY, Alberta, June 5 (Reuter) - A battle shaping up for control of the Arakis Energy Corp.'s board could
change the corporate direction of the Calgary-based company known for its $1 billion Sudan oil project.
Some large Arakis shareholders have criticized the control by Chairman Lutfur Khan and his allies on the board, citing the absence of more independent members experienced in international oil and gas.
Another force is the Lundin family, which bought 8.2 percent of Arakis stock in March through their holding in Swedish Sands Petroleum AB holding and have been granted one director nominee. The group has lobbied for two more, but Kahn said in an interview on Thursday the request would be rejected. "Eight percent does not give them entitlement to have more in my personal opinion," he said. "There are institutions who have similar holdings and if they would like to put their nominee forward, we would like to honor that as well."
Although he acknowledged he was not a career oilman, Khan
defended the two other directors with whom he is most closely
allied as experienced oil and gas professionals. He also said plans were afoot to expand the board to include more outsiders at the annual meeting in late July. "Our goal, when the smoke clears, is to have an independent board with no perceptions of any one group or person in
control," Dan Rice, prominent fund manager for State Street Research, said in a telephone interview from Boston. "Nirvana for me is two board members from Sands, two board members for Lutfur Khan and three independent board members." State Street Research controls about 7.5 percent of the stock, making the group the largest shareholder after Sands.
The Lundins, based in Geneva and Vancouver, operate several international oil and gas and mining companies, including Sands, International Petroleum Corp. and Tenke Mining Company officials have said they wanted to have the influence to boost Arakis's stock price .
After an increase this week in Arakis trading activity on
Nasdaq, rumors began to circulate that interests friendly to the Lundins were buying more stock before proxies were mailed at the end of June for the July annual meeting. Family representative Lukas Lundin declined to comment on Thursday.
Sources close to the situation said the push for more directors came after the group felt out major shareholders on
the concept of Sands launching a takeover bid for Arakis, a
proposal shot down by investors uninterested in taking Sands
stock in exchange.
"The only basis for a takeover would be a paper exchange of
Sands paper for Arakis paper and I am not at all interested in
any such transaction," Rice said.
Kahn said the Sudan government had made it clear it would
not allow Sands or International Petroleum into the oil project
"by the back door," at least until the development was completed in 1999. IPC is already involved in a project on nearby concession in Sudan.
Arakis's partners in its project include China National Petroleum Corp., Malaysia's Petronas and the Sudan government.
Current directors include Khan and his associates Arman Aziz and Asif Syed. Khan, Aziz and Syed founded State Petroleum, the now-Arakis-owned unit that secured the company's concession in 1991.
Former Occidental Petroleum Corp. executive James Taylor, who learned about Arakis and its project as a negotiator for Oxy when it wanted in last year, signed on as a director in April. Calgary oilman John McLeod was fired as chief executive by Khan in a surprise move in late April, but still sits on the company's board.>>> |
