Rob Snyder, In Letter To Just Energy Board, Says Lack Of Progress On Just Energy Strategic Review Is "Proving Unhelpful" To Company’s Business, Stockholders
Says Strategic Review, "Should Be Concluded As Soon As Reasonably Possible"
Strategic Review Delay Has Caused Stockholders To Defer Decisions On Governance, Management, Business Focus, Capital Priorities, Snyder Says
Snyder Says Just Energy Can Be Remedied Through Installation Of, "Industry-Expert And Invested Oversight"
December 23, 2019 Email This Story Copyright 2010-19 EnergyChoiceMatters.com
Reporting by Paul Ring • email@example.com
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Rob Snyder, the veteran of retail energy as well as private equity and M&A, has written a letter to the Just Energy Group Inc. Board of Directors in which Snyder says that the lack of demonstrable progress with respect to Just Energy's previously reported strategic review is now almost inarguably proving unhelpful to the company’s business, management team, and stockholders, and that the delay in concluding the strategic review has deferred decision-making by the company's stockholders concerning Just Energy's governance, management, business focus, and capital priorities
The letter was made public in an amended Schedule 13D/A that was filed with the U.S. Securities & Exchange Commission by Rob Snyder, through the entity "The Robert L. Snyder Trust – 2005 Stream" (hereafter collectively referred to as the "Reporting Persons")
In summarizing the letter in the Schedule 13D/A filing, the Reporting Persons said, "the Strategic Review process should be concluded as soon as reasonably possible."
In the letter, Snyder also writes, "after limited diligence, my educated belief is that there is nothing wrong with Just Energy Group that cannot be remedied through the installation of industry-expert and invested oversight, a daily commitment to manage the Company for positive cash flow and a sharp focus on profitable operations: all while providing value for its customers."
The Reporting Persons continue to hold 9.3% of the outstanding shares of the Common Stock of Just Energy Group Inc.
In the letter to Just Energy's board, the Reporting Persons said that delays in the conclusion of the Strategic Review have deferred, "much-overdue decisionmaking by the Company’s stockholders as to key future considerations relating to its governance and other organizational bona fides (including the composition of its Board of Directors and senior management, its key areas of ongoing business focus, capital priorities, etc.)."
Summarizing the letter in the Schedule 13D/A, the Reporting Persons said, "Further and among other statements, the Reporting Persons communicated its view — and has asked other major stockholders of the Company to independently communicate their respective views to the Company’s management, advisors and/or Board members — that the Strategic Review process should be concluded as soon as reasonably possible."
"Following upon this recent letter to the Company’s Board of Directors, the Reporting Persons will continuously assess the Company’s Strategic Review, business, financial condition, results of operations and prospects, general economic conditions, the securities markets in general and the Common Stock in particular, other developments, other investment opportunities, and its current strategies to enhance and maximize shareholder value," the Reporting Persons said in the newly filed Schedule 13D/A
Similar to statements in prior Schedule 13D filings, the Reporting Persons said in the latest Schedule 13D/A that, "Although the Reporting Persons had no plans or proposals at the time of the various purchases and do not have any particular plans or proposals at present, the Reporting Persons have conducted extensive informational discussions with other significant stockholders of the Company regarding the Strategic Review, the Accounts Receivables Adjustments and other recent events involving the Company, its leadership and future direction. The Reporting Persons have communicated with other significant stockholders of the Company their intention to monitor the Strategic Review with a view towards other potential courses of action regarding their investment in the Company, contingent upon the outcomes of the Strategic Review, with particular focus upon its business, direction and appointed and/or elected leadership."
Similar to statements in prior Schedule 13D filings, the Reporting Persons said in the latest Schedule 13D/A that, "The Reporting Persons intend to review their investment in the Company on a continuing basis and may further engage in communications with and/or express their views to and or/meet with management, the Company’s board of directors, one or more other shareholders, officers of the Company or third parties, including potential acquirers, service providers and financing sources, and/or formulate plans or proposals regarding the Company, its assets or its securities, and may take other steps seeking to bring about changes to increase shareholder value. Such proposals or positions may include one or more plans that relate to the Company’s business, management, capital structure and allocation, corporate governance, board composition and strategic alternatives and direction. During the course of such communications, the Reporting Persons may advocate or oppose one or more courses of action."
Snyder, one of the best known principals within the deregulated energy retailer sector, was the principal co-founder of Stream Energy and served as its de facto CEO through 2012. Snyder further had been Stream’s controlling equityholder since its inception. As previously reported, Stream Energy was acquired by NRG in July 2019 for a stated purchase price of $300 million.
According to public records, the entity through which Snyder has amassed his Just Energy position -- The Robert L. Snyder Trust - 2005 Stream -- is a Texas grantor trust established in 1997 by his parents with a $1 million bequest. The entity is reportedly the vehicle through which Snyder has managed his investments over the last 20 years, including interests in York International Corp., ShiftSmart, TakeStock Inventory, Intarcia Therapeutics and, most notably, Stream Energy.
Snyder previously practiced mergers & acquisitions law within what was known as the Tender Offers Group at the Manhattan office of Fried, Frank, Harris, Shriver and Jacobson LLP. Snyder also spent a decade as Managing Director of family-controlled private equity firm SnyderCapital Corporation
The full letter from Snyder to the Just Energy Group Inc. Board of Directors is below
"You will each recall that Just Energy Group Inc. (the 'Company') on June 6, 2019 announced that its Board of Directors had decided to undertake a formal review process to evaluate strategic alternatives available to the Company (the 'Strategic Review').
"At such time, the decision of the Board of Directors to undertake this Strategic Review was said to follow upon the receipt 'of expressions of interest from a number of parties concerning potential transactions involving the Company.' Tellingly, the Company also then declared its expectation that the Strategic Review was not expected to have an impact on either the customers, suppliers or employees of Just Energy or its operations
"However, more than six months have passed since the onset of the Strategic Review, without any specific guidance since from the Company as to the state of this initiative. And it is my strong view that the lack of updates from the Company concerning this endeavor, tied to a string of unwelcomed news announcements, has created an air of rampant speculation and negative assumptions within the its investor ranks that has ill-served both the Company and its stockholders.
"More critically, I believe that this substantial passage of time without demonstrable progress with respect to the Strategic Review is now almost inarguably proving unhelpful to the Company’s business, management team and stockholders. The ongoing delay in concluding the Strategic Review -- the outcome of which will prove a strong inflection point for the foreseeable future of our firm -- has deferred much-overdue decisionmaking by the Company’s stockholders as to key future considerations relating to its governance and other organizational bona fides (including the composition of its Board of Directors and senior management, its key areas of ongoing business focus, capital priorities, etc.)
"And I know that I am not alone among the Company’s stockholders in my concern with respect to such foundational matters.
"While onlooking industry players have followed with lack of surprise the operational turmoil that has played out during 2019 within the Company’s business, it seems to the outside world that strategic direction at Just Energy Group in recent years has been lacking in both contemporary subject matter expertise and -- even worse -- economic alignment with stockholder interests. Indeed, the Company’s recent history retrospectively makes clear a dramatic disconnect between the operational & competitive realities of the Company’s served markets, on one hand, and the cumulative situational awareness of the Company’s various principal overseers on the other hand.
"Thankfully and after limited diligence, my educated belief is that there is nothing wrong with Just Energy Group that cannot be remedied through the installation of industry-expert and invested oversight, a daily commitment to manage the Company for positive cash flow and a sharp focus on profitable operations: all while providing value for its customers.
"In any case – and while I have not broadly canvassed the Company’s institutional stockholder ranks -- you are generally aware that I have had limited conversations with a few other large common stockholders of the Company. As I believe from our talks that these holders generally share my concerns as to the state of the Strategic Review, I have asked certain of these stockholders to also if independently communicate to the Company’s management, advisors and/or Board members their independent and respective views that the Strategic Review process should be concluded as soon as reasonably possible.
"Finally, know that I am transmitting this letter via electronic mail to Scott Gahn [President and Chief Executive Officer of Just Energy] for forwarding to the other members of the Just Energy Board of Directors -- but also that I stand ready to engage with the Company towards effecting the actions necessary towards dramatically enhancing stockholder value."