Rentech Inc., a wood-pellet processor with interests in fertilizer manufacturing, shouldn’t start big projects, pursue acquisitions, sell shares or add new directors before its next annual meeting, a group of activist shareholders said.
The group, calling itself Concerned Rentech Shareholders, is urging the Los Angeles-based company’s board to refrain from any activities that may “further devalue” it, according to a letter to the board made public today. The group, which has said it holds a 4.6 percent stake in Rentech’s outstanding shares, nominated four board candidates for election at the next meeting.
The board “must refrain from making any ‘Hail Mary’ attempts with our capital to try and increase the company’s value before the 2014 annual meeting,” the shareholder group wrote. “We will consider holding the directors personally liable for gross negligence if the board approves any of the above activities.”
The shareholder group is led by Newport Beach, California-based Engaged Capital LLC and Lone Star Value Management LLC of Greenwich, Connecticut. The group said in a Jan. 13 statement it nominated the independent directors to Rentech’s board in a drive to do a better job of overseeing the company.
Engaged and Lone Star have accused Rentech’s board and management of “failed strategies” and “wasteful spending,” including the failure of an experimental plant in Colorado to convert cellulosic biomass into synthetic gas. Ventures, including the fuel project, have cost the company almost $500 million, the activists wrote in the letter.
“Rentech is always open to constructive input from our shareholders as part of the company’s constant focus on maximizing shareholder value,” the company said in a Jan. 13 statement. Rentech said it would “carefully evaluate” the four board nominees.
The company, with a market value of $401.5 million, dropped 2.2 percent to $1.77 yesterday in New York. The shares have fallen 39 percent in the past year.