SandRidge di­rec­tors and share­holder con­tinue at­tacks

The Oklahoman - - RETAIL - BY ADAM WILMOTH En­ergy Ed­i­tor aw­ilmoth@ok­la­

Less than a week be­fore a key share­holder vote, SandRidge En­ergy Inc. di­rec­tors and ac­tivist in­vestor Carl Ic­ahn con­tinue to trade at­tacks.

The two sides ex­tended their pat­tern of duel­ing reg­u­la­tory fil­ings this week when SandRidge di­rec­tors re­peated their crit­i­cisms of Ic­ahn and his plan to gain con­trol of the com­pany’s board and Ic­ahn re­sponded by call­ing the ef­fort a waste of share­holder money.

SandRidge’s lat­est salvo

In a let­ter to share­hold­ers filed Mon­day, SandRidge di­rec­tors re­stated their re­quest that in­vestors re-elect all five SandRidge di­rec­tors along with two of Ic­ahn’s nom­i­nees. The cur­rent di­rec­tors also re­peated their crit­i­cism of Ic­ahn’s plans to work with Matthew Grubb, SandRidge’s for­mer pres­i­dent and chief op­er­at­ing of­fi­cer, say­ing he helped lead what Ic­ahn has called a “debt-fu­eled ac­qui­si­tion spree” that re­duced the com­pany’s value and share price.

“Ic­ahn is seek­ing to gain con­trol of the com­pany with­out pay­ing an ap­pro­pri­ate pre­mium and dis­rupt the on­go­ing strate­gic re­view process at the ex­pense of other share­hold­ers,” the di­rec­tors said in Mon­day’s let­ter. “There is no ben­e­fit to pro­vid­ing Ic­ahn with ad­di­tional board rep­re­sen­ta­tion be­yond the two in­de­pen­dent nom­i­nees your board al­ready rec­om­mends.”

Ic­ahn has called for share­hold­ers to re­ject the en­tire board, in­stead re­plac­ing the five di­rec­tors with a full slate of seven nom­i­nees of his choos­ing. Ic­ahn also has said that if he gains con­trol of the board, he will con­sider mak­ing an of­fer to buy the com­pany.

“Two new board mem­bers pro­vide Ic­ahn with board rep­re­sen­ta­tion well in ex­cess of its own­er­ship, and the elec­tion of more than two Ic­ahn could be detri­men­tal to the progress of the im­par­tial strate­gic re­view process and the fu­ture sta­bil­ity of SandRidge,” the di­rec­tors said. “Elect­ing ad­di­tional Ic­ahn nom­i­nees is un­nec­es­sary and would weaken the in­de­pen­dence and di­ver­sity of the board and dis­rupt the on­go­ing strate­gic re­view process which is fo­cused on in­creas­ing share­holder value for all share­hold­ers.”

Ic­ahn fires back

Ic­ahn this week re­sponded to the SandRidge direc­tor’s claims and to their ear­lier crit­i­cism that his in­vest­ment at other en­ergy com­pa­nies has hurt those firms in the long run.

“In a last-ditch, des­per­ate at­tempt to dis­tract your at­ten­tion away from their own hor­ri­ble record, the in­cum­bent di­rec­tors have seen fit to hand mil­lions upon mil­lions of your dol­lars to ‘de­fense’ ad­vi­sors to cre­ate pretty, col­or­ful charts which in­ten­tion­ally mis­rep­re­sent our in­vest­ment record in the en­ergy sec­tor,” Ic­ahn said in Mon­day’s let­ter to SandRidge share­hold­ers.

Ic­ahn said his in­vest­ment in Na­tional En­ergy is most sim­i­lar to his in­vest­ment in SandRidge.

“Dur­ing the hold­ing pe­riod,we­great­lyen­hanced val­ues for all in­vestors by find­ing the right man­age­ment teams and work­ing with them as­sid­u­ously to grow the busi­ness through or­ganic in­vest­ment and through a se­ries of bolt-on ac­qui­si­tions,” Ic­ahn said. “In ad­di­tion, we in­stalled op­er­a­tional and fi­nan­cial guide­lines to im­prove the busi­nesses, in­clud­ing re­align­ment of the fixed as­set costs struc­ture, re­serve life ex­pan­sion by main­tain­ing a highly suc­cess­ful drilling pro­gram and im­ple­men­ta­tion of in­ter­nal con­trols.”

Ic­ahn said he sold his in­vest­ment in Na­tional En­ergy in 2006 for $1.5 bil­lion, a to­tal re­turn of more than 321 per­cent.

The vote is set to take place at the com­pany’s an­nual meet­ing at 9 a.m. June 19 at SandRidge’s Oklahoma City head­quar­ters.

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