Hedge fund Engine Capital has urged Calgary-based fuel retailer Parkland Corporation to focus on refreshing its board of directors rather than fighting a multimillion-dollar legal battle with its largest shareholder, according to a report by The Globe and Mail.
The report cites a letter sent to the company by the New York-based hedge fund on Monday as saying: “It is becoming increasingly obvious that Parkland is at a crossroads.”
The letter goes on to outline two options: that the board can either “continue to act in a self-serving manner by trying to entrench itself” or it can “begin working collaboratively”.
“Engine is hereby putting the board on notice not to engage in wasteful litigation with its shareholders,” Engine wrote.
Two of Parkland’s Directors – Michael Christiansen and Marc Halley – appointed by Cayman Islands-based Simpson Oil, Parkland’s single largest shareholder with a 20% stake in the business, resigned late last year after just seven months on the board, reportedly after Parkland refused to name one of them as Chair of the company.
Simpson Oil has subsequently declared its governance and board nomination agreements with Parkland, which prevent any activist activity or Simpson Oil soliciting bids to acquire the company, as invalid, leading to a potential legal battle.
