Quick Facts
FONT-SIZE Plus   Neg
Share SHARE

Engine Capital Releases Open Letter To LSB Industries' Board - Quick Facts

Engine Capital LP, a shareholder of LSB Industries, Inc. (LXU: Quote), issued an open letter it sent to the company's board, critical of the company's corporate governance, corporate structure, communication with shareholders and repeated operational failures. Engine Capital expressed its belief that the firm's inherent value far exceeds its current stock price, and that such unrealized value could be unlocked through improvement in the composition of the board, a sale or spin-off of the company's climate control business, and conversion of a portion of the company's chemical assets into a publicly-traded master limited partnership.

In its letter, addressing the board members, Engine Capital LP said: "We invested in LSB because we think that the Company is significantly undervalued and there are opportunities within the control of management and the Board to increase shareholder value substantially. In particular, we think that the Board would be significantly strengthened by adding a number of new members with relevant backgrounds in chemical asset operations, climate control, and corporate finance, and with no ties to the Golsen family. We also urge the Company to establish a special committee of truly independent directors to analyze the Company's strategic alternatives to maximize value, including separating the climate control business from the chemical assets and converting certain of the chemical assets into an MLP structure."

At the current price, the enterprise value of LXU is nearly $850 million, considering the insurance claims that were paid after September 30, 2013. "In our opinion, the best way to value the company is through a "sum of the parts," given the very different financial characteristics of the climate control business and the chemical assets," the company added. "We therefore think that LSB's total inherent value is at least $1.5 billion, implying a stock price between $65 and $75 per share, compared to LXU's stock price of around $39 per share as of the time of this writing."

Register
To receive FREE breaking news email alerts for LSB INDUSTRIES INC and others in your portfolio

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

Business News

Editors Pick
While buying interest has remained somewhat subdued, stocks are seeing modest strength in mid-day trading on Thursday. The slim gains on the day have lifted the S&P 500 to a new record intraday high above the 1,990 level. New home sales in the U.S. showed a notable decrease in the month of June, according to a report released by the Commerce Department on Thursday, with the steep drop offsetting the jump seen in the previous month. After reporting a modest drop in first-time claims for U.S. unemployment benefits in the previous week, the Labor Department released a report on Thursday showing that initial jobless claims unexpectedly fell to their lowest level in over eight years in the week ended July 19th.
comments powered by Disqus
FREE Newsletters, Analysis & Alerts

 

Stay informed with our FREE daily Newsletters and real-time breaking News Alerts. Sign up to receive the latest information on business news, health, technology, biotech, market analysis, currency trading and more.