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TPG-Axon Calls Again for SandRidge Restructuring, Sale

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Global investment firm TPG-Axon has again called for a restructuring or sale of SandRidge Energy, citing the company's third-quarter earnings performance, poor strategy and structural challenges such as staggering overhead costs.

In a letter to SandRidge's board of directors Friday, the company, which owns 6.5 percent of SandRidge's outstanding shares, also announced its intent to conduct a consent solicitation of shareholders to amend the bylaws of SandRidge to de-stagger the board of directors, provide that directors be removed with or without cause, and remove and replace the current board of directors.

"We would emphasize and re-iterate that the time has come for change, and for a focus on delivering shareholder value," said TPG-Axon CEO and founder Dinakar Singh in a statement. “We continue to believe that SandRidge stock is dramatically undervalued, and that a sensible restructuring or sale of the company could provide dramatic upside for shareholders."

TPG-Axon is separately sending a formal request that SandRidge set a record date for this consent solicitation, and a demand to exercise TPG-Axon’s rights as shareholders to inspect the shareholder list.

TPG-Axon has retained Mackenzie Partners Inc. to act on its behalf in the solicitation process.

The firm said in the letter that it sees only two possible options for SandRidge: a dramatic simplification and restructuring of the company or a sale. "Of these two options, a lack of confidence in management, as well as the complexity involved in a potential restructuring, lead us to believe that an outright sale of the company is the most realistic path to restoring the shareholder value that has been destroyed," TPG-Axon said.

TPG-Axon believes the company has significant asset value, and that SandRidge shares are dramatically undervalued. "However, the continued leakage of value from massive overhead costs (triple that of most exploration & production companies), high cost of capital (more than double that of most E&P companies), and strategic incoherence, have resulted in enormous destruction of value," the company said.

Earlier this month, TPG-Axon and a second SandRidge shareholder, private investment firm Mount Kellett Capital Management, called for the company's board of directors to make changes to improve the company's financial performance and for SandRidge CEO Tom Ward to step down.

SandRidge said the company was 'actively working' to address shareholder issues.

Earlier this month, SandRidge's board adopted a stockholder rights plan aimed at discouraging a takeover and amended the oil and gas company's bylaws to require a majority shareholder vote to approve any changes in certain requirements, including provisions related to the composition of the board, Dow Jones Newswires reported.



Karen Boman has more than 10 years of experience covering the upstream oil and gas sector. Email Karen at kboman@rigzone.com.

WHAT DO YOU THINK?

Post a Comment Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
Randy Pearson | Dec. 2, 2012
The only experience I have is trying to land a job at Sandridge. I know many people that work there and some are very knowledgeable and capable. I have had one interview since the location was put in Alva Oklahoma and I have 40 years of experience and the job was given to a young man who once worked for me that has very little experience in what he does. Its a good ole boy system which is fine if you are qualified but........ I own Sandridge stock that I bought online and it is worth 75% less than what i paid for it. Awhole lot of room for improvement. I'm trying to get a position with the Sandridge supply outlet that McJunkin Redman bought. I have 35 years in the supply industry and owned a supply company for 10 years but I was omited from an interview for reason unknown to me. As you know they couldnt cut it operating a supply branch and now they struggle getting parts. Its all kind of comical. I hope someone demands changes.



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