Venator Materials' investor pushes for board change amid plummeting stock price (updated)

Huntsman

10/01/2023 14:02

(Updates with comment from company)
    By Svea Herbst-Bayliss
       NEW YORK, Jan 10 (Reuters) - An investor with a large
stake in Venator Materials Plc  VNTR.N  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  HUN.N  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 York
Editing by Matthew Lewis and Susan Fenton)
 ((svea.herbst@thomsonreuters.com; +617 856 4331; Reuters
Messaging: svea.herbst.thomsonreuters.com@reuters.net))