Corre boss ousted in bailout

Keith McGrane, the founder of Corre Energy, is set to be ousted as chief executive as shareholders assert control after coming to the ailing company’s rescue with a late rescue deal last Friday.
According to sources involved in the plan, a new management team is being assembled to take over from McGrane, a scientist by background, who will be moved into a different role within the company, possibly as early as this week.
The new leadership is expected to begin a programme of asset disposals quickly to help steady Corre’s finances, as well as slash operating costs and finance the development of a more tightly focused portfolio of energy storage projects.
Meanwhile, Rothschild, the investment bank appointed in April to assess funding options for the company, is understood to be exploring the sale of a large shareholding in Corre to a significant investor.
The moves come ahead of the appointment of an interim board, expected this month, and are part of a plan to put an end to a period of uncertainty that saw Corre lose most of its directors and come within weeks of running out of cash. Last Friday Corre agreed a loan facility of up to €5 million with a group of shareholders who control one third of the company, including Northern Ireland’s Boyd family and the businessman Nick Furlong, to arrest its dramatically deteriorating financial position.
The loan, which is being provided at no interest, is convertible to shares in the company after six months at twice the outstanding loan amount. This could give the group control of 45 per cent of Corre if the full €5 million is drawn down, according to shareholder sources.
Smaller shareholders are also being encouraged to participate in the take-up of new equity, partly to de-risk the exposure of the bailout group.
However, McGrane and Darren Patrick Green, officially the largest shareholder on the register, were excluded from the deal and are expected to have much of their equity wiped out in the capital restructuring of the company, shareholder sources said.
Last month Corre disclosed that its holding company, which is controlled by Green and McGrane, had pledged shares as collateral for loans it raised for Corre — something that other shareholders did not know.
But the shares have taken a pounding in the past year, falling by more than 90 per cent, even as the company went back to the markets to raise €2.1 million in fresh capital.
It is understood that many investors began dumping shares due to rumours of the stock overhang attached to the loans, which forced the lenders to sell more shares to meet their obligations.
However, Corre Energy was the best performing stock on Euronext Dublin last Friday, rebounding by 20 per cent to close above 32c on news of the financial lifeline.
Sources close to the deal said it was unlikely that the €5 million would be fully drawn down and added the bailout group expected the available funding to provide 12 months of working capital for Corre.