SandRidge investor wants shareholder vote on company's board
BY MIKE LEE Bloomberg News
Saturday, December 01, 2012
12/01/12 at 5:30 AM
SandRidge Energy Inc., the Oklahoma City-based producer that's lost 28 percent of its value this year, should allow its shareholders to vote on replacing the board of directors, clearing the way for the company to be sold, hedge fund manager Dinakar Singh said Friday.
Singh, whose TPG-Axon Management LP increased its stake in SandRidge to 6.5 percent from 6.2 percent on Nov. 13, has asked the board to set a date for a shareholder vote to remove directors. He wants rule changes that would allow the directors to be replaced at once and removed without cause, he said in a letter to the board.
TPG-Axon and Mount Kellett Capital Management LP, which owns 4.5 percent of SandRidge, have called for the company to put itself up for sale, fire CEO Tom Ward and add outside directors.
Shares of SandRidge have declined 78 percent from its IPO value in November 2007, according to data compiled by Bloomberg.
"An outright sale of the company is the most realistic path to restoring the shareholder value that has been destroyed," Singh wrote.
SandRidge spokesman Greg Dewey said the company is reviewing the letter.
Ward founded SandRidge after leaving Chesapeake Energy Corp. in 2006. He owns 5.2 percent of the company's shares, according to data compiled by Bloomberg.
SandRidge began as a gas producer and switched to exploring for oil when natural gas prices fell in 2008. The company said Nov. 8 that it would sell its Permian Basin property in Texas to raise money to drill in its 1.8 million acres in the Mississippian Lime field in Oklahoma and Kansas.
The company "bet the ranch" by acquiring far more acreage than it can realistically develop, Singh said. "As a result, funding has become a constant drama in recent quarters."
SandRidge is burdened by high overhead costs and overpays Ward, Singh wrote. The company paid Ward $67.3 million in 2008 to compensate him for personal investments he made in its gas wells, according to regulatory filings.
A third shareholder, Prem Watsa, CEO of Fairfax Financial Holdings Ltd., increased his stake in SandRidge to 10.4 percent and praised Ward in a Nov. 19 interview as "one of the best operators in the business."
SandRidge adopted a shareholder rights plan Nov. 19 that will allow existing shareholders to buy more stock at a discount if an outsider tries to gain control of the company, making a takeover more difficult.
Shares of SandRidge rose 3.2 percent Friday to finish at $5.85.
Original Print Headline: SandRidge shareholder board vote sought