A New York-based hedge fund has filed papers with federal securities regulators to remove SandRidge Energy board members and restructure the company.
In a filing with the Securities and Exchange Commission, TPG-Axon Capital Management, which owns 6.7 percent of SandRidge shares, seeks to replace CEO Tom Ward and the SandRidge board with seven directors of its own. The slate of proposed directors includes TPG-Axon founder Dinakar Singh, and others with years of experience at publicly traded companies and energy firms.
TPG-Axon also seeks to de-stagger board elections and remove board members for any reason. TPG-Axon and another large SandRidge investor, Mount Kellett Capital Management, have criticized the company for a large debt load, excessive spending and lack of a business strategy.
In a letter sent to SandRidge on Monday, TPG-Axon accused Ward and his son of buying land for drilling and then "flipping" it – selling it back to the company at a higher price.
"It is our understanding that Mr. Ward and his son, Trent Ward, actively compete with the company and, in addition, have also engaged in repeated transactions in which they ‘front-run' the company," Singh wrote in the letter. SandRidge disclosed in a March filing that it bought interest in leases from WCT Resources, which is owned by Ward family trusts.
TPG-Axon also has sued SandRidge in Delaware Chancery Court to extend the 60-day period for shareholders to vote on the proposed changes. The firm claims SandRidge began the process prematurely December 19 so that fewer shareholders would vote.
"Obviously the company is fearful of allowing the voice of shareholders to be heard," Singh wrote in the recent letter. "Rather than attempt to reform, management and the board seem intent on various tricks and artifice in an attempt to gather advantage and confuse the process."
The letter criticized the company's adoption of a "poison pill" to make takeovers more difficult and the issuance of more than $37 million in additional shares to top management.
SandRidge stock was flat at $6.25 at 11:01 a.m. Thursday. The company has not responded to TPG-Axon's demands since it responded November 8 to the hedge fund's first letter. SandRidge shares are down more than 80 percent since the company's 2007 initial public offering.