Parkland Responds to Shareholder Litigation
CALGARY, Alberta — Parkland Corp. expressed "surprise and disappointment" at litigation initiated by Simpson Oil Ltd., Parkland's largest shareholder.
In a released statement, the company rejected the prospect that routine changeover in its management team over the past five years has resulted in a material adverse change that would relieve Simpson from its obligations under the companies' governance agreement, calling the legal move "without precedent."
[Read more: Parkland Delivers Record Earnings During Q2 2024]
On Aug. 13, Simpson commenced an application with the Ontario Superior Court of Justice seeking a declaration that the standstill and voting restrictions under the governance agreement between Simpson and Parkland, dated Jan. 8, 2019, have ceased to apply in accordance with the terms of the agreement on the basis of a material change in the composition of Parkland's senior management since that date.
According to Simpson, it previously agreed to a standstill covenant and restrictions on its ability to vote its PKI shares freely due to its confidence in the stewardship of Parkland at the time and because the restrictions would fall away on the occurrence of a material adverse change, which explicitly included "a material change in the composition of senior management at Parkland."
However, there has since been "substantial churn" of the senior management team, with seven of the 10 people identified as members in Parkland's 2018 Annual Information Form having left or ceased to be senior managers, while the performance of the company has suffered, Simpson said.
This is not the case, asserted Parkland, which last spring rejected Simpson's call for a strategic review.
"Parkland has worked tirelessly to resolve differences with [Simpson (SOL)] whose latest actions indicate they are seeking greater influence over our board than we believe is in the best interests of all our shareholders," said Michael Jennings, chairman of Parkland's board of directors.
"Parkland's board and management are aligned in defending the company's rights and the interests of all its shareholders," Jennings continued. "We continue to remain open to a constructive resolution with SOL. We are ready to reengage with SOL at any time and are committed to reaching a resolution that maximizes shareholder value, ensures good governance practices, and protects the rights and interests of all our shareholders."
Parkland cited ongoing efforts to reach an amicable resolution with Simpson, such as transitioning Jennings as the new chairman and an ongoing board renewal that includes three recent new director appointments.
The company also expressed its willingness to sunset the 2019 Governance Agreement and reappoint two Sunset nominees to the board, in order to allow Parkland to continue to execute its strategy without disruption.
Calgary-based Parkland Corp. is an independent supplier and marketer of fuel and petroleum products and a convenience store operator. Parkland currently services customers across Canada, the United States, the Caribbean region and the Americas through three channels: retail, commercial and wholesale.