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TransAlta Corp. blasted activist investors targeting the company, saying they appear to want to push the Canadian electricity generator into a “dead-end” strategy of doubling down on coal-fired power and are making unreasonable demands to receive discounted shares.
Mangrove Partners and an entity controlled by C. John Wilder’s Bluescape Energy Partners LLC asked TransAlta to issue Wilder $150 million of discounted shares as part of a proposed settlement agreement last month. The company said Monday that was “a demand that no board could reasonably accept.”
TransAlta, which instead agreed to a $750-million investment from Brookfield Asset Management Inc., said the activists should have accepted its offer to put Wilder and a mutually agreed-upon director on its board. It argued the firms are trying to take control of the board.
“Had the dissidents accepted our offer, Mr. Wilder would have a seat at the Board table,” TransAlta Chairman Gordon Giffin said in a statement. “Instead, they notified the company of their intention to nominate five new directors, which suggests they are seeking the ability to terminate the Brookfield investment and implement the playbook they have used at other companies of selling renewable energy assets and doubling down on coal-fired generation, which is a dead-end strategy and something we will not do.”
TransAlta detailed its interactions with the investors in a regulatory filing Monday, in which it noted that the duo were also seeking the formation of a business review committee chaired by Wilder to explore asset sales and other options as part of its proposal presented to the company. It was also seeking $1.1 million in reimbursement for their investment, it said.
TransAlta’s Brookfield deal includes giving the alternative asset manager two board seats and the ability to convert its investment into an ownership stake in a future subsidiary that would hold its Alberta hydro assets. A third new director, Robert Flexon, would also be appointed to the board, the company said last week.
Mangrove and Bluescape, who collectively hold more than 10 per cent of TransAlta, believe there may be better offers in the market than the Brookfield deal. The activist investors had originally sought four seats on TransAlta’s board and wanted the power producer to allow Mangrove and Bluescape to appoint a new a chief operating officer, according to the filing Monday.
Mangrove and Bluescape declined to comment earlier and couldn’t be immediately reached for comment after the statement from TransAlta.
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