Morning Brief: Corvex Says It Lost Court Battle Over Energen Meeting

November 06, 2017   Stephen Taub

Keith Meister’s activist hedge fund firm says it will appeal the ruling, which impedes Corvex’s plans to make over the company’s board.

Corvex Management says it lost a legal case in its bid to call a special meeting of shareholders of Energen in an attempt to gain several seats on its board of directors. Several months ago, the activist hedge fund firm headed by Keith Meister boosted its stake in the oil and gas exploration and production company to 10.1 percent. It also threatened to call a special meeting of shareholders so they could approve an expansion of the size of the board to 15; Corvex planned to propose its own nominees to fill the vacancies.

Corvex claimed under Alabama law it can propose a special meeting if it owns at least 10 percent of the shares. Energen claimed that under Alabama corporate law, Corvex was not permitted to call a special meeting of shareholders for these purposes, and on September 12, it sued in an Alabama Circuit Court. In a new filing, Corvex said on October 31 that the court determined that, under Alabama law and Energen’s Certificate of Incorporation, "the Board has the sole right, to the exclusion of shareholders, to determine the number of directors on the Board within the ranges specified in the Charter, and to fill any vacancies that may be created through the increase in the size of the Board."

The court also prohibited Corvex from taking steps to call a special meeting for these purposes. "Corvex believes the ruling is contrary to the weight of applicable authority, as well as sound corporate policies in that it results in a limitation on shareholders’ ability to determine the composition of the Board of their company," it states in its regulatory filing. It said it plans to "promptly" appeal the decision to the Alabama Supreme Court and, if the Alabama Supreme Court determines that shareholders such as Corvex have the right to call special meetings to expand the board and nominate directors, "Corvex will then evaluate whether to call such a special meeting." It also said it may nominate individuals to the board at the next annual meeting, when four of nine directors will stand for election.

Philippe Laffont’s Coatue Management said that as of October 24, it owned about 7 million shares of Shopify, or 8.2 percent of the e-commerce company. At the end of the second quarter, the Tiger Cub owned a little more than 2.6 million shares. We won’t know for another week or so what its position in the stock was as of the end of the third quarter. Since October 24, the stock is down more than 7 percent. However, it is up about 130 percent year to date.

Samlyn Capital said it owned nearly 25.7 million shares of Applied Minerals, or 16.9 percent of the producer of halloysite clay. The hedge fund, which disclosed the position in a 13D filing, did not own any shares of the company as of the end of the second quarter, the latest period for which quarterly holdings are available.


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