HOUSTON, Dec. 10, 2020 /PRNewswire/ -- American
Resources, Inc., and SK Energy LLC, the investment vehicle of Dr.
Simon Kukes, one of the largest
shareholders of Ring Energy, Inc. (NYSE: REI), announced today that
they believe that the slate of Directors that are listed in the
proxy mailed out by the company do not represent the best interests
of all shareholders. As a result of this, they urge all
shareholders to withhold votes on all Directors.
Frequently, when other publicly traded companies have put before
their shareholders a slate of Board candidates riddled with
potential conflicts of interest, the shareholders of many of these
other companies have responded by withholding votes for some or all
directors (for example, Disney Company at its 2004 annual meeting,
Comverse Technology at its 2011 annual meeting, HomeStreet, Inc. at
its 2018 annual meeting, and many others). When the voting results
were publicly announced, the large number of withheld votes served
to persuade the incumbent Board to add shareholder representatives
to the Board. These shareholder representatives generally improved
the overall quality of corporate governance and frequently resulted
in higher shareholder returns. A similar analogy to Ring Energy,
albeit much larger, is Occidental Petroleum whose stock is up
approximately 60% since March 25,
2020 when four board members were replaced by
representatives nominated and approved by a prominent activist
investor in a settlement with management.
Notably, on August 10, 2020, Dr.
Kukes delivered a letter to the Board of Ring Energy as a
"nominating shareholder" pursuant to the company's bylaws
requesting the nomination of more than a dozen highly-qualified,
independent individuals as candidates for the Board of Ring Energy.
However, none of the proposed nominees are included on Ring
Energy's slate of Directors listed in its current proxy.
In the other publicly traded companies discussed above, the
decision of shareholders to withhold votes often led to a very
clear and dramatic improvement in the long term performance of the
publicly traded stock. In such cases, shareholders benefitted from
the decision of many shareholders to withhold votes.
Dr. Kukes believes that there are many potential conflicts of
interest between the Directors listed in the proxy mailed out by
the company and its shareholders. First, Dr. Kukes points out that
some of these Directors worked with the CEO of Ring Energy earlier
in their careers. Board members that have this sort of relationship
with a CEO may be unable to conduct arms-length compensation
negotiations.
Furthermore, if the CEO of Ring Energy is unable to meet his
performance metrics and needs to be replaced, Directors that have a
close relationship with him may put their personal loyalties and
relationships ahead of their fiduciary duty to do what is best for
all shareholders.
Dr. Kukes also points out that in late October 2020, the Board of Directors of Ring
Energy appears to have priced an offering of Ring Energy shares.
Individuals who purchased shares in this offering may have been
misled by the Board of Directors of Ring Energy that the company
intended to close the sale of its Delaware Basin assets.
It appears that shortly after the sale of Ring Energy shares in
the offering was completed, Ring Energy announced in a press
release dated October 30, 2020 that
the sale of the Delaware Basin
assets was not going to happen. To the best of Dr. Kukes'
knowledge, no one has yet provided written proof that the Board of
Directors of Ring Energy intentionally misled the buyers of these
shares. But questions remain.
It is possible that the fact pattern of shares being sold to new
shareholders, followed immediately thereafter by a material
negative surprise being announced by the company, could provide the
basis for a class action lawsuit against the Directors of Ring
Energy on behalf of the buyers of those shares. Dr. Kukes does not
endorse such a class action lawsuit, but the possibility of such a
class action lawsuit may taint the ability of the Ring Energy Board
to effectively do its job and serve shareholders.
Furthermore, even if the buyers of the newly issued Ring Energy
shares fail to take action against the Board of Directors of Ring
Energy, those shareholders who owned shares prior to the
offering may themselves have a serious complaint against the Board
of Directors due to its decision to issue new shares that seriously
diluted the interests of the existing shareholders.
SK Energy and American Resources call upon each individual
shareholder and institutional shareholder of Ring Energy to examine
the actions of the Board of Directors with regard to the
appointment and compensation of its new CEO, and the sale of Ring
Energy shares in October 2020, and to
also examine all of the other potential distractions that the Board
may face and examine potential serious conflicts of interest that
the Board may have.
SK Energy and American Resources also call upon the proxy
advisory firms to examine the actions of the Ring Energy Board of
Directors. Do such actions suggest a possible violation of
fiduciary duty? Do they suggest a potential violation of their
duties of care and loyalty? Again, there may be no written
proof of violations, but Dr. Kukes is confident that a very
detailed reading of the proxy statement and recent facts may lead
neutral unbiased observers to conclude that there is ample reason
to withhold votes.
SK Energy and American Resources are confident that, after a
careful examination of the actions of the Ring Energy Board of
Directors, others will conclude that a withhold vote on all
directors is warranted.
About SK Energy LLC and Dr. Simon
Kukes
SK Energy LLC is an investment company owned by
Dr. Simon Kukes, a globally-renowned oil and gas industry
executive. Dr. Kukes has held various positions over the years,
including as President and CEO of Tyumen Oil Company (TNK) where he
was involved in the ~$20 billion
merger of TNK and British Petroleum to form TNK-BP in 2003, and as
CEO of Hess Corporation's Samara-Nafta subsidiary, where he was
instrumental in the subsidiary's $2.05
billion sale to Lukoil in 2013. He is also currently the
largest shareholder, CEO and director of PEDEVCO Corp. (NYSE MKT:
PED), an NYSE-listed oil and gas company active in the Permian and
D-J Basins.
About American Resources, Inc.
American Resources,
Inc. ("ARI") is a Houston, Texas
based oil and gas investment, development and operating company
focused on acquisition of underexploited, distressed and/or
undervalued oil and gas assets and companies where ARI believes its
involvement can add value. ARI strives to maximize value through
active management of assets and/or board level participation in its
corporate investments.
About Ring Energy, Inc.
Founded in 2012, Ring Energy
is a Midland, Texas-based oil
and gas exploration, development and production company with
current operations in the Permian Basin of West Texas and
is recognized as the top producing oil basin in North
America.
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SOURCE SK Energy LLC and American Resources, Inc.