logo
Share SHARE
FONT-SIZE Plus   Neg

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

Engine Capital LP, a shareholder of LSB Industries, Inc. (LXU), 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."

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

Business News

Quick Facts

Editors Pick
Shares of Rio Tinto Plc. were losing around 7 percent in the morning trading in London after the mining giant reported a loss for its fiscal year 2015, compared to profit last year, amid steep decline in commodity prices. Further, the company announced flat dividend, and said it is no longer appropriate to maintain the progressive dividend policy. French lender Societe Generale SA reported Thursday higher net profit in its fourth quarter, while operating income declined sharply amid higher litigation provision and lower net banking income. However, fiscal 2015 was marked by good operating performances in all the businesses. Citing the annual results, the company lifted its dividend. Fast-food giant Burger King will be adding hot dogs to its menu in the US from February 23. According to Burger King's North American President Alex Macedo, this addition is the most significant menu addition for the burger chain since it added a chicken sandwich in the 1970s. Burger King will...
comments powered by Disqus
RELATED NEWS
Trade LXU now with 
Follow RTT