Billionaire Carl Icahn on Tuesday called for the resignation of two SandRidge Energy board members, fewer than two weeks after his efforts forced management to abort the purchase of Bonanza Creek Energy.
Icahn said in a letter to the oil and gas producer's board and specifically chairman John Genova (reviewed by Kallanish Energy) he wants to nominate one new director, while the other would be determined by other large shareholders.
The activist investor is SandRidge’s largest shareholder, holding 13.5% of outstanding shares, while hedge fund Fir Tree is the second-largest shareholder, with 8.3% of the outstanding.
Oklahoma City, Okla.-based SandRidge, which emerged from bankruptcy last year, said in November it would pay $746 million for rival Bonanza Creek to expand its presence in Colorado’s Denver-Julesburg Basin.
Icahn called the offer "value-destroying,” forcing SandRidge to cancel the deal.
“We believe the current directors were remiss in attempting to ram through a dilutive, overpriced and value-destroying acquisition without at the very least reaching out and discussing this with the company's shareholders,” Icahn wrote.
He also criticized CEO James Bennett for the company's actions under his management. "We question why you refuse to hold James Bennett accountable for his history with SandRidge during a period of massive value destruction," Icahn wrote.
Icahn also demanded the company either terminate a "poison pill" shareholder rights plan announced in November, or raise its shareholding threshold to 25% from 10%.
In a short written response, the SandRidge board and management said they “value constructive shareholder dialogue and are engaged in ongoing discussions with shareholders, including Mr. Icahn. In this regard, SandRidge's independent board members are scheduled to meet with several major shareholders next week, including Mr. Icahn.”
Referencing the poison pill, the statement said “As we have already confirmed in writing to Mr. Icahn on two separate occasions … the short-term rights plan does not prevent shareholders from speaking with each other as long as they do not form a group and comply with federal securities laws.”