SandRidge Energy Inc. (NYSE:SD), an oil and natural gas company based in Oklahoma, announced the implementation of a shareholder rights plan after two of its major stockholders pressed the sale of the company.
In addition, the company also declared a dividend of one right on each outstanding share of the company’s common stock. Furthermore, the board of directors of the Oklahoma based company also amended its Bylaws related to the classification and number of directors, filling of vacancies on the board, and newly created directorships.
According to the company, the rights plan was designed to ensure that every stockholder will receive a fair and equal treatment in the event of any proposed takeover, and to prevent any strategy from gaining control of SandRidge Energy Inc. (NYSE:SD) without paying all shareholders a premium. The company also wants to make sure that every stockholder would realize the long-term value of their investments in the company.
Prem Watsa, chief executive officer of Fairfax Financial Holdings Limited (PINK:FRFHF), praised SandRidge Energy CEO Tom Ward during an interview with Bloomberg. He said, “We believe Tom Ward is one of the best operators in the business and that the company he has built, SandRidge Energy, is poised to do well in the long term.”
Prem Watsa's Fairfax Financial Holdings Limited (TSE:FFH) is one of the shareholders of SandRidge Energy. Fairfax Financial Holdings Limited (TSE:FFH) recently increased its stake in the company to 10.4 percent.
In a statement, SandRidge Energy Inc. (NYSE:SD) said, “Today’s actions are designed to protect the interest of our stockholders. The board and management look forward to continuing to engage in constructive dialogue with stockholders regarding our plans for the business and remain committed to improving performance and enhancing stockholder value.”
SandRidge Energy Inc. (NYSE:SD) shareholders have the right to buy additional shares, if an outside party purchased more than a 10 percent stake in the company, or if an institutional investor acquires 15 percent of the company under the rights plan.
Dinakar Singh, CEO of TPG-Axon Management LP, and Jonathan Fiorello, chief operating officer of Mount Kellet Capital Management LP, sent a letter to the board of directors of SandRidge demanding the ouster of Tom Ward, to appoint new directors, and to put the company up for sale.
In his letter, Fiorello wrote, “We believe that — properly managed — the company's assets are worth approximately $20 per share.Unfortunately, all we see now are critical failures of management and board oversight. SandRidge has not merely failed to even remotely maximize the potential of its assets, but it has destroyed stockholder value.”
Mount Kellets owns a 4.5 percent stake, while TPG-Axon owns a 6.2 percent stake of SandRidge Energy Inc. (NYSE:SD).