Hess Mails Third Support Letter to Shareholders
NEW YORK -- For the third time, Hess Corp. today issued a letter to its shareholders urging them to vote for its proposed six new members to its board of directors. The oil company conversely asked its stockholders to reject an alternative plan put forth by activist hedge fund manager Elliott Management Corp. on or before its May 16 annual meeting of shareholders.
As CSNews Online previously reported, Elliott purchased a more than 4-percent stake in Hess and asked shareholders to approve its own proposed five members to the oil company's board. The investor group, run by Paul Singer, stated Hess' current board of directors failed to "oversee management and hold it accountable for over a decade of failures." It added that Hess' stock was immensely undervalued, something it hoped to rectify.
However, Hess announced earlier it would become a pure-play exploration and production (E&P) business, and would therefore sell off -- but not close -- the 1,361 gas stations and convenience stores it operated as of Dec. 31. The company has yet to officially announce any such sales.
But Hess' letter today, signed by Chairman and CEO John Hess -- owner of a 10-percent stake in the company -- stressed the company has completed asset sales totaling $3.4 billion thus far in 2013, with more to come.
"By applying the proceeds from these 2013 divestitures to reduce debt and strengthen our balance sheet, we will have the financial flexibility both to fund future growth and also to direct most of the proceeds from additional asset sales to returning capital directly to our shareholders through our increased dividend and $4 billion share repurchase program," wrote John Hess.
The chief executive added that Hess' stock has significantly outperformed its peer index, rising 67 percent in the past nine months. Several Wall Street analysts have applauded Hess' formation into an E&P company, he added.
"Unfortunately, Elliott Management, a hedge fund that recently acquired shares in Hess, has its own agenda. It is seeking to disrupt our progress in favor of a short-term exit," wrote John Hess is today's letter. "Having put forward a plan to break up Hess that was widely discredited by Wall Street analysts and industry observers, and most importantly many of our shareholders, Elliott is now running a proxy contest to attempt to install five hand-picked dissident directors to your board [of directors] in order to continue to push forward with its flawed and ill-conceived plan."
Hess' new board of director choices, John Krenicki Jr., Dr. Kevin Meyers, Fredric Reynolds, William Schrader and Dr. Mark Williams are independent and highly accredited, unlike Elliott's nominees, John Hess concluded in the letter.