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.
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