Lone Star Value Taking Dakota Plains To Task Again

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Lone Star Value Taking Dakota Plains To Task Again
Dakota Plains

Lone Star Value upped its stake ever so slightly, now owning 7.9% of Dakota Plains Holdings ($DAKP). The activist hedge fund continues to believe it’s an undervalued small-cap. But the non-independent board is violating shareholder rights.

Here are Lone Star Value’s latest gripes:

Harm to Shareholder Rights

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As recounted in our April 14, 2015 press release regarding Dakota Plains, we made every effort earlier this year to constructively engage with the Company’s Board of Directors (the “Board”) with a goal of maximizing shareholder value, rights, and representation for the benefit of all DAKP shareholders. Unfortunately, in the middle of these discussions, the Board abruptly adopted self-serving and shareholder-unfriendly entrenchment devices, including prohibiting shareholders from acting by written consent and calling special meetings prior to the 2015 Annual Meeting of Stockholders (the “2015 Annual Meeting”). The Board’s actions not only completely undermined their claims that they support good corporate governance, but also showed that while we were working hard to reach a settlement agreement for the benefit of all shareholders, the CEO and Board were focused on protecting their positions and were negotiating in bad faith.

Given this behavior, we were quite skeptical that the Board’s unilateral changes due to our involvement were done with the best interests of shareholders in mind. The reactionary changes made by the Board included the addition of two new directors, the formation of a strategy committee, the hiring of an investment bank, and the commencement of a formal strategic alternatives review process. Unfortunately, our skepticism has proven warranted. On June 17th, the Board announced it unilaterally extended the suspension of shareholders’ ability to act by written consent and call special meetings for another year, through the 2016 Annual Meeting of Stockholders.

Board’s Lack of Independence

The “new” Board appears to be more of the same given it and the CEO are continuing to place their personal interests above those of the shareholders. As we feared and ca