FrontFour Capital Group LLC and a “like minded shareholder” who collectively control more than 5% of Renegade Petroleum (TSXV:RPL) issued a statement this morning strongly criticizing Renegade’s Board for mismanagement of a strategic process (read: sale of the company), after private attempts to work "cooperatively” with Renegade to “restore the Company’s credibility” were rejected.
Renegade’s asset base is “attractive” and “high quality” according to FrontFour, who blame the Board for the company’s underperformance. The Board “missed” $30 million in fees associated with a “Transformational Transaction” (December 2012 merger with Canadian Phoenix Resources Corp.). Renegade has been unable to recruit a CEO and CFO to fill vacant positions at the company, and lack technical competency in oil and gas, the investors’ say. Additionally, FrontFour complains Renegade’s Board disposed of “non-core” assets for inadequate consideration, representing “poor business judgement.”
In connection with the special meeting of shareholders FrontFour have formally requested, they will file an Information Circular which will include an alternative slate of directors, the press release stated.
"Renegade's board and its advisors continue to deplete the Company's cash resources while the shares remain near an all-time low," said Zachary George, Co-Founder and Managing Member of FrontFour.
Mr. George is the son of former Suncor CEO Rick George. Mr. George (senior) is quite possibly the “like minded shareholder” working with FrontFour, according to one Calgary-based oil and gas analyst we discussed the situation with.
“We’ve long argued Renegade has attractive assets that should provide above-average growth and, theoretically, a much higher valuation than the current 3.7x EV/DACF,” said an AltaCorp Capital research note published this morning. Altacorp continued, “Shareholders should still see something meaningfully higher than $1.03 – with a transaction / or a change in management. Clarity is what should be a very key catalyst near-term. We re-iterate our Outperform, and highlight the solid capital efficiencies, with $28M in excess cash flows available over and above requirements to sustain production.”
Disclosure: Long RPL as of this morning.