Sempra Makes Peace with Activist Funds
Sempra Energy said September 18 it has an agreement with two key shareholders on how two new board members should be appointed, and how to 'repurpose' its LNG projects leadership.
The US utility said it has entered into a 'cooperation agreement' with investment funds Elliott Management and Bluescape Energy Partners; the two collectively own a 4.9% interest in Sempra worth $1.6bn.
At its 2Q results last month - when it posted a loss of $561mn, against a year-ago $259mn profit - Sempra Energy CEO Jeffrey Martin said it had "taken significant steps to begin optimizing our portfolio of assets and expand our LNG business." A year ago, Sempra admitted its Cameron LNG development had fallen behind schedule with start-up deferred until 2019, although it insisted the three-train complex would open by 2020. The two activist funds are understood to have focused on such shortfalls.
The Sempra announcement comes as Cheniere outlined its new liquefaction and export projects are proceeding broadly to plan, while aspiring rivals such as Venture Global LNG and Tellurian say they are not far off taking investment decisions.
As part of an ongoing refreshment of its board, Sempra has now said it, Elliott and private equity fund Bluescape worked cooperatively together to identify a discrete list of final board nominees and expect to work together for Sempra Energy to announce and appoint two new directors to its board that are "mutually agreed between the parties in the coming weeks". It also pledged to repurpose its board's current LNG Construction and Technology Committee into a new 'LNG and Business Development Committee' consisting of three current members plus the two new directors that will join Sempra's board.
The LNG and Business Development Committee's updated charter calls for it to work with management and the board in leading a comprehensive review of Sempra Energy's businesses. The charter also allows the committee to retain its own independent consultants and advisors. Sempra Energy said it intends to update the market on the results to date of the strategic review in 1Q2019.
Elliott and Bluescape also agreed to maintain their current Sempra shareholding for the time being, and jointly said the announcement resulted from a "constructive dialogue" with Sempra's board.