SandRidge activist investors win court ruling
BY JEF FEELEY & MIKE LEE Bloomberg News
Saturday, March 09, 2013
3/09/13 at 4:59 AM
Investors in SandRidge Energy Inc. have persuaded a judge to bar the company's directors from impeding their efforts to replace the board in a proxy fight, according to court filings.
Delaware Chancery Court Judge Leo Strine in Wilmington concluded Friday that SandRidge directors can't strong-arm shareholders into rejecting a slate of board candidates backed by hedge fund TPG-Axon Capital Management LP and other activist investors in a March 15 proxy contest.
Officials of New York-based TPG have been soliciting votes to oust the directors, including CEO Tom Ward, since January.
Investors in Oklahoma City-based SandRidge should have the "right to make a free, uncoerced choice" about whether to replace all seven of the company's directors, Strine said in a 38-page decision.
TPG, SandRidge's third-largest shareholder, and Mount Kellett Capital Management LP have called on the oil and natural gas producer to bring in new directors and remove Ward from his post as chairman because of the company's poor performance. Shares of SandRidge have fallen 78 percent since its 2007 initial public offering, according to data compiled by Bloomberg.
Greg Dewey, a SandRidge spokesman, and Anton Nicholas, a spokesman for TPG-Axon, didn't immediately respond to voice messages and emails seeking comment on the ruling.
TPG and Mount Kellett officials, owners of a combined 11 percent stake in SandRidge, want managers to cut overhead by selling the company's planes and reducing employee compensation. They also want SandRidge to refocus its business on oil-drilling projects.
The ruling reinforces the idea that shareholders shouldn't be pressured by either side in the proxy fight over the board, said Jason Wangler, an analyst with Wunderlich Securities Inc. in Houston.
"TPG is allowed to present the facts and SandRidge is allowed to present the facts," Wrangler said in an interview. "Outside of that, there should be nothing else."
Jerald Kallick, a SandRidge shareholder, filed suit in January arguing company officials wrongfully interfered with TPG's and Mount Kellett's efforts to gather shareholder votes and win a board majority.
Shareholders' lawyers said SandRidge directors are misusing provisions tucked into lender agreements covering the company's $4.3 billion in debt.
The board also previously allowed Ward to acquire interests in the company's wells in return for contributing a share of the drilling costs, shareholders say. SandRidge later ended that program.
Original Print Headline: SandRidge activist investors win ruling