Page 10 - NorthAmOil Week 29

NorthAmOil PROJECTS & COMPANIES
NorthAmOil
Icahn launches
proxy fight against
Occidental
US
BILLIONAIRE activist investor Carl Icahn has formally launched a proxy ght against Occiden- tal Petroleum in a bid to win control of four seats on the company’s board. e move comes a er talks between Icahn and Occidental’s CEO, Vicki Hollub, failed to result in agreement.
Indeed, Icahn spoke with Hollub on July 10 in a last-ditch e ort to reach a compromise and avert a proxy ght. According to a ling with the US Securities and Exchange Commission (SEC), his associates also spoke with Occidental execu- tives twice earlier this month.
“Occidental refused to cra a compromise and so we’ll happily take our case to stockhold- ers, which the company should have done with this bet-the-company transaction,” Icahn told Reuters on July 18.
Icahn owns 4.4% of shares in Occidental. He has been critical of the company for not giving its shareholders a say in the proposed $38bn acquisition of Anadarko Petroleum. He described the transaction as “misguided and hugelyoverpriced”.
“ e Icahn participants believe that the com- pany’s current directors have made a number of mistakes in how and at what cost they pur- sued the Anadarko transaction,” Icahn said in the July 18 SEC ling. “In addition to agreeing to expensive nancing, the company also struc- tured the Anadarko transaction in a manner that deprived the stockholders of the company of the right to vote on the transformational Anadarko transaction.”
In the ling, Icahn’s four candidates for the board are identi ed as former Shell Oil president John Hofmeister, former Jarden chief nancial o cer Alan LeFevre and two executives with Icahn’s own investment company, Nicholas Gra- ziano and Andrew Langham.
In a letter to Occidental shareholders sent on July 22, Hollub asked them to reject Icahn’s bid to replace board members. She wrote that the investor did not understand the nancial ben- e ts of the merger with Anadarko, and that his board nominees “do not possess skills, experi- ence or expertise that are additive or superior to our existing directors”.
Icahn renewed his attack on Occidental and Hollub later that day, in a letter of his own sent to Occidental shareholders. In the letter, he accused Hollub and Occidental’s chairman, Eugene Batchelder, of appearing to have negotiated the “extremely risky” transaction because of fears that their own company was an acquisition target.
“I do believe that Hollub and Batchelder know what’s good for them and their personal agendas but do not particularly care what’s good for shareholders,” Icahn said in the letter. “With [Occidental] weakened and doing poorly, Hol- lub and Batchelder were fearful there would be a bidforthecompanywhichshareholderswould accept.”
Icahn accused Hollub of panicking when arranging nancing for the Anadarko deal. e comment was made with reference to Occidental having struck a $10bn nancing deal with War- ren Bu ett’s Berkshire Hathaway as the company pushed to outbid Chevron for Anadarko. But the nancing was in the form of preferred shares that pay dividends at a rate of 8% per year – a yield well above the prevailing market rate. Icahn said this equated to Occidental’s executives giving up too much in order to secure the deal.
“You need somebody like us, or a voice on that board to keep these people honest,” Icahn said. “ e board has done a deal that I think is ridiculous. ey could panic again.”
Icahn expects to schedule meetings with Occidental shareholders in the next four weeks to push his case for board seats, and is seeking support from 20% of them. is would force the company to set a record date to establish which investors would be eligible to vote on replacing the directors. If this is achieved, Icahn will then solicit their written consent for removal, which he described as a “long and expensive” process.
e proxy ght is considered unlikely to stop the Anadarko deal, which is anticipated to close in the second half of this year. However, it has the potential to in uence the pace and direction of asset sales worth billions of dollars that are antic- ipated a er the acquisition closes.™
Carl Icahn is trying to win control of four seats on Occidental’s board.
The move comes after talks between Icahn and Occidental’s CEO, Vicki Hollub, failed to result in agreement.
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w w w . N E W S B A S E . c o m Week 29 25•July•2019