By Svea Herbst-Bayliss
NEW YORK (Reuters) -An investor with a large stake in Venator Materials Plc has asked for board seats, criticizing the chemical company’s poor financial performance and a 96% drop in its share price, in a letter it sent to the board on Tuesday.
J&T MS 1 SICAV owns 14.3% of Venator and is ratcheting up the pressure on one of the world’s largest makers of titanium dioxide, used in products including paints, sunscreen and toothpaste, after months of trying to engage privately.
It proposed Martin Seycek, a member of J&T MS 1 SICAV’s supervisory board, as a director candidate and said it would suggest an additional candidate to sit on the board, which currently has eight members, according to the letter which was seen by Reuters.
J&T wrote that it has tried to work constructively with the Venator board since May 2022 but has encountered “apparent delay tactics and gamesmanship.”
“We strongly urge you to immediately add myself and another independent director to be nominated by us to the Board,” the letter said. J&T also warned “we are prepared to exercise all of our rights as shareholders to hold each individual director accountable.”
Venator said it has an open dialogue with all shareholders and has worked to engage in “constructive conversations” with J&T. But “beyond its demand for board seats, J&T has yet to offer any concrete thesis or recommendations,” Venator said in an emailed response to a Reuters request for comment.
J&T blames Venator’s board for the 96% drop in the stock price since its public listing in 2017, including a string of closing prices below $1 a share which prompted the New York Stock Exchange to warn in November that the company may be delisted. Venator was spun off from chemical company Huntsman Corp and its share price tumbled 71% in the last 52 weeks.
In its letter, J&T pointed to low gross margins, negative cash flow and a lack of strategic direction as the roots of Venator’s troubles, forcing the company to ask turnaround management specialist Alvarez & Marsal Europe LLP for advice on operational and financial moves.
“Given the deteriorating situation and the Board’s poor oversight, we believe that the incumbent directors have forfeited the right to maintain the status quo and chart the path forward for Venator,” the letter said.
Venator blames some of its troubles on weak demand, record high energy prices and inflationary concerns and said it has adopted a cost-cutting program, agreed to a sale-leaseback transaction and plans to divest its iron oxide business. “We have been working hard on a path forward to address the near-term challenges of our business,” the company statement said.
J&T’s letter says Venator’s board, which includes Huntsman CEO Peter Huntsman and chemical industry-oriented private equity firm SK Capital Partners’ co-founder Barry Siadat, is dominated by affiliates of Huntsman Corp and SK Capital and lacks diversity and experience.
While Venator rivals have directors with broad experience, the Venator board’s skills are focused mainly on the chemicals industry and have prevented it from creating “a go-forward strategy to restore confidence among investors,” the J&T letter said.
(Reporting by Svea Herbst-Bayliss in New YorkEditing by Matthew Lewis and Susan Fenton)