CALGARY, Alberta — Cation Capital Inc. (together with its affiliates and associates, “Cation Capital” or “Cation”), a private investment firm that continues to raise its ownership stake in Crescent Point Energy Corp (TSX/NYSE:CPG) (“Crescent Point” or the “Company”), today commented on the ongoing value erosion of Crescent Point’s share price due to the clear failure of leadership and governance within the Company.
Sandy L. Edmonstone, President of Cation Capital, said, “Since the beginning of April, Cation has been working on behalf of all Crescent Point shareholders, who have and continue to suffer significant value destruction. We have made repeated, good faith efforts to engage constructively with the Company, arguing that experienced, independent leadership, executing a new strategy focused on shareholder returns, is necessary to turn around the Company and its share price. In response, the Company has taken clearly ineffective half measures. On a recent shareholder conference call that Cation hosted, there was strong participation from both institutional and individual investors, who made it clear they believe Crescent Point requires strong, independent new leadership to lead the Company on a formal value maximization process. There is significant momentum among shareholders, and it is more important than ever that Crescent Point listen to them.”
In the last five years, Crescent Point’s stock has declined by ~90%, to the point that it now is at risk of being removed from the S&P / TSX 60 Index. In response to pressure from Cation, the Company recently abandoned its so-called five-year strategic plan and removed its Chairman and CEO. Unfortunately, neither action has slowed the pace of value destruction. Since the proxy cut-off date for the last annual general meeting, the Company’s share price has declined ~60%. Not even the Company’s directors seem to have faith in the Company’s direction, given their minimal share purchases despite the stock being near an all-time low.
The markets have not embraced the Company’s changes either. Management’s revised strategy clearly lacks the urgency, credibility and focus investors expect. As an example, the Company commits to a number of “transition plan deliverables” over a leisurely “12 to 24 months” with no mention of shareholder returns or value.1 Yet, each of these so-called deliverables could further destroy significant shareholder value, when pursued simply to “deliver” without regard for shareholders, as is the Company’s unfortunate pattern.
Equally disappointing to many investors, the Company’s new Chairman and CEO are both insiders who owe their new positions to their respective predecessors and bring minimal outside experience to these roles. They obviously lack the independence, expertise and objective credibility that the Company desperately needs to set a new course.
Faced with this situation, Cation will continue to emphasize the Company’s need for an independent, experienced Chairman and CEO to lead the Company on a credible value maximization process and out of the depths of the value destruction that the current Board and management team have all caused. While the Company has rejected meeting with Cation since early April, Crescent Point Chairman Bob Heineman (and former Compensation Committee Chair) and current Compensation Committee Chair Mike Jackson will be embarking on a series of meetings with select institutional investors at the end of November. Those shareholders privileged to have the Company’s ear should take every opportunity to bring forward the many critical questions that Cation has raised around governance and exactly how the Company’s current leadership will unlock value for shareholders. In addition, investors should ask why a pair of board members would embark on such a series of meetings without their newly appointed CEO.
Mr. Edmonstone continued, “The market is the truest barometer of confidence in the Board and management team, and with the share price at all-time lows, it is more clear than ever that change is necessary. Like many shareholders, we believe there is the potential to unlock billions in value, and remain committed to bringing change to Crescent Point and holding the current leadership accountable for the value destruction they have overseen. If the Crescent Point Board and management can’t effect positive change, including installing independent leadership to lead a formal value maximization process, we reserve every right to bring about change for the benefit of all shareholders.”
About Cation Capital Inc.
Cation Capital Inc., together with its affiliates and associates, is a private investment firm headquartered in Alberta, Canada. Cation invests in situations where it is able to influence operational, financial and strategic direction. Cation seeks value in companies that are experiencing financial or operational challenges, are in out-of-favour sectors or are otherwise in need of change to drive significant long-term value for stakeholders.
Additional Information
The information contained in this press release does not and is not meant to constitute a solicitation of a proxy within the meaning of applicable corporate or securities laws. At this time Crescent Point has not scheduled a meeting of its shareholders and shareholders are therefore not being asked to execute a proxy in favour of the matters set forth in this press release. Notwithstanding the foregoing, Cation is voluntarily providing the disclosure required under subsection 9.2(4) of National Instrument 51-102 – Continuous Disclosure Obligations in accordance with securities laws applicable to public broadcast solicitations.
This press release and any solicitation made by Cation in advance of any Crescent Point shareholder meeting will be made by Cation and not by or on behalf of the management of Crescent Point. Cation may engage a solicitation agent to make any such solicitations. All costs incurred for any solicitation will be borne by Cation, provided that, subject to applicable law, Cation may seek reimbursement from Crescent Point of Cation’s out-of-pocket expenses, including proxy solicitation expenses and legal fees, incurred in connection with a successful result at any meeting of shareholders of Crescent Point.
As noted above, Cation is not hereby soliciting proxies in connection with any Crescent Point shareholder meeting and shareholders are not being asked at this time to execute proxies in favour of the matters set forth in this press release. Any proxies solicited by Cation will be solicited in accordance with applicable securities laws, including pursuant to a dissident information circular sent to Crescent Point shareholders after which solicitation may be made by or on behalf of Cation, by mail, telephone, fax, email or other electronic means, by public announcement and in person by representatives of Cation or proxy advisors retained by Cation or by Cation’s nominees. Any proxies solicited by Cation in connection with any Crescent Point shareholder meeting may be revoked by instrument in writing by the shareholder giving the proxy or by its duly authorized officer or attorney, or in any other manner permitted by law.
None of Cation or, to its knowledge, any of its associates or affiliates, has any material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in any matter proposed to be acted on at a meeting of Crescent Point shareholders other than as set forth herein.
Crescent Point’s registered office address is Suite 3700, 400 – 3rd Avenue S.W., Calgary, Alberta, Canada T2P 4H2.
1 Crescent Point’s “Q3 2018. Corporate Presentation,” p. 15.
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Contacts
Media:
Gagnier Communications
Dan Gagnier / Jeffrey Mathews
Cation@gagnierfc.com
1-646-569-5897