CALGARY 鈥� An activist investor is calling for a complete board overhaul at Parkland Corp. following the recent resignations of two of the company's board members.
New York-based activist investor Engine Capital LP made the recommendation in a letter released publicly Monday, adding it doesn't believe Parkland's current board should be responsible for its own refreshment process.
Engine, which holds 2.5 per cent of Parkland's outstanding shares, said Parkland should instead collaborate with its largest shareholders to reconstitute the board with directors who will "prioritize the interests of all shareholders."
"We continue to believe that the value creation opportunity at Parkland is very significant, and we urge the company to immediately start working with its largest shareholders versus treating them as adversaries," the letter states.
Engine Capital has been making intermittent demands for change at Parkland since last March, when it urged the company to sell or spin off its Burnaby, B.C., refinery and become a pure play fuel and convenience retailer.
Its latest criticism comes just weeks after the resignation of two members of Parkland's board, both of whom had been nominees of Simpson Oil, Parkland's largest shareholder.
Since 2022, when Parkland consolidated its ownership of Sol, a Caribbean fuel retailer formerly owned by Simpson Oil, Simpson has owned about 20 per cent of Parkland shares.
The resignations mean Simpson no longer has a seat on the fuel retailer's board, and Simpson has also waived its previously agreed-upon right to nominate two members to Parkland's board.
Engine said Parkland's failure to work constructively with Simpson does not bode well for the ability of its board to provide oversight regarding more complex decisions to optimize shareholder value.
In a note to clients, RBC Capital Markets analyst Luke Davis said he does not expect a material shift in corporate strategy from Parkland due to the latest shots from Engine.
But he said Engine's most recent letter has once again highlighted that Parkland shares continue to trade at a discount to its peers, and the dispute with Simpson Oil adds a certain amount of uncertainty.
"Overall, we believe continued disagreement could present an overhang on the stock, though we do not have clarity on Simpson's intentions at this point," Davis said.
This report by The Canadian Press was first published Jan. 22, 2024.
Companies in this story: (TSX:PKI)
Amanda Stephenson, The Canadian Press
