Parkland Corp. owns thousands of convenience stores and gasoline stations in Canada, the U.S. and the Caribbean under brands like On the Go, Pioneer and Ultramar, as well as frozen food retailer M&M Food Market.Supplied
A U.S. hedge fund pushing for an overhaul of Parkland Corp. PKI-T lashed out at the company for failing to address its concerns and said it will oppose the re-election of Parkland’s incumbent directors at the company’s coming annual general meeting.
In a letter sent to Parkland on Thursday, New York-based Engine Capital, which owns roughly 2 per cent of Parkland’s shares and has called on the convenience store and fuel supply giant to be broken up or privatized, said its requests to meet with directors have been rebuffed, with the company only offering up a meeting with its chief financial officer, Marcel Teunissen.
“Engine has engaged with more than 50 boards of directors over the last decade, and we have never encountered a situation where one has been so unresponsive,” wrote Arnaud Ajdler, managing partner at the US$750-million fund. “The response from an engaged and competent board of directors should be to engage with a major shareholder, not to hide behind its CFO.”
Last month, Engine called on Parkland’s board to undertake a strategic review, citing “staggering underperformance” of its shares compared with rivals. Engine said the company would be worth more if it split its retail operations from its fuel production and supply business.
Parkland owns thousands of convenience stores and gasoline stations in Canada, the U.S. and the Caribbean under brands such as On the Go, Pioneer and Ultramar, as well as frozen food retailer M&M Food Market. It also operates a refinery in Burnaby, B.C., along with other fuel assets, which Engine considers “none-core.”
The hedge fund said the performance of Parkland’s shares since Engine went public with its demand for a strategic review on March 22 suggests investors are keen for change. Parkland’s shares closed at $31.70 Thursday, up roughly 9 per cent over the last month.
In launching its activist push, Engine also argued that Parkland’s board needed refreshing to ensure its independence. Parkland’s largest shareholder, Barbados-based Simpson Oil Ltd., has since reached a deal with the company to nominate two directors to the board at the annual shareholder meeting on May 4.
Engine said it will support those nominees, but would vote against the re-election of Parkland’s existing directors.
In particular, the hedge fund took aim at chairman Jim Pantelidis, who has served as a director for 24 years. Engine said it was “disappointed” Mr. Pantelidis intends to serve for another three years, even after Parkland adopted new rules that broadly limit the tenure of directors to 10 years.
Engine said the company’s decision to renominate him reflected a “complete lack of urgency” to address shareholder concerns.
In a statement, Parkland said that it has engaged with shareholders including Engine, “frequently over the past several months,” and that it has received the backing of independent proxy advisory services ISS and Glass Lewis ahead of its AGM.
Parkland also said Simpson Oil has expressed support “for all our directors and for our overall strategy to build long-term shareholder value.”