The agreement includes: (1) four TPG-Axon Capital-nominated directors will be added to the board; (2) the board will complete a review by an independent firm of the related-party transactions no later than June 15 and then decide if the results warrant termination of Chairman and CEO Tom Ward; and (3) the board will review the company’s strategic options and look to reduce overhead costs.
TPG-Axon Capital has agreed to terminate its consent solicitation and withdraw its notice to the company of its intent to present certain proposals and nominate certain individuals for election as directors. Mr. Ward will remain Chairman and CEO pending the results of the related party transaction review.
Separately, Matthew Grubb, COO, has resigned to pursue other opportunities.
RBC Capital thinks there could be a short-lived rally on hopes that the shake-up could lead to new strategic initiative that unlocks value. RBC notes that a new strategy could take time to evolve and may not provide significant upside opportunity.
TPG-Axon Capital is SandRidge Energy Inc. (NYSE:SD)’s third largest shareholder with a 7.33% stake. Prem Watsa’s Fairfax Financial is the largest shareholder of SD with a 12.66% holding.
For the fiscal year ended 31 December 2012, SandRidge Energy Inc. revenues increased 93% to $2.73B. Net income applicable to common stockholders increased 64% to $86M. Revenues reflect Exploration & Production segment increase from $1.24B to $2.57B. Net income was partially offset by Midstream Gas Services segment loss increase from $13M to $73M, Other segment loss increase of 47% to $131.8M.