CALGARY, Alberta--(BUSINESS WIRE)--Cation Capital Inc. (together with its affiliates and associates, “Cation Capital” or “Cation”), a private investment firm and shareholder of Crescent Point Energy Corp (TSX/NYSE: CPG) (“Crescent Point” or “Company”), today commented on Crescent Point’s surprise first quarter 2018 earnings loss, announced this morning.
The Company’s disappointing results – below analysts’ expectations – were driven by rising operating costs and G&A expense, successive quarters of high share-based compensation, increased debt due to continued spending well above cash flow and continued operational challenges.
Shareholders should be concerned regarding the following disclosures in Crescent Point’s first quarter results:
- Q1 payout ratio of 184%, with net debt increasing 10%
- Operating expenses increased 3.3% and G&A increased 4.1% quarter over quarter on a boe basis
- After a late increase in CapEx budget in 2017, an overspend on that budget to barely exceed year end exit rate production, to then disclose spending $739 million in Q1 2018 to achieve production lower than the 2017 exit rate
- Share-based compensation costs of $28.8 million, an increase of 155 percent from the same period in 2017, which according to the Company were “driven by the upwardly revised estimate of non-market performance conditions and improved total shareholder return performance relative to peers”
- Premature disclosure of an agreement to sell assets, potentially harming the Company’s ability to extract full price during negotiations
In a deviation from the Company’s prior practice, this morning’s first quarter earnings announcement occurred a day after the deadline for shareholders to submit their proxies for this year’s annual meeting.
Sandy L. Edmonstone, President of Cation Capital, said, “Crescent Point’s continued dismal results this morning add urgency to our call for change. They are further proof that the Company’s ‘strategy’ is fundamentally flawed and that the current board is unable to set a new course or reign in the current CEO. And by withholding this morning’s announcement until after yesterday’s proxy deadline, Crescent Point’s entrenched board members demonstrate once again that they believe they shouldn’t be held accountable to shareholders for another quarter – or five years’ worth – of value destruction.
“Cation’s board nominees have already garnered tremendous support and while the proxy voting deadline has passed, it is not too late for shareholders to join the move for constructive change and hold the Company’s entrenched incumbent directors accountable.
“You have the right to revoke your proxy any time before the morning of the annual meeting, or if you are a registered shareholder, revote your shares in person at the meeting. If you submitted the Company’s white proxy card, we urge you to revoke your proxy and withhold your votes now. By doing so, you will add your voice to the significant call for change at Crescent Point.”
IT’S NOT TOO LATE TO HOLD THE CRESCENT POINT BOARD ACCOUNTABLE:
REVOKE YOUR WHITE PROXY CARD NOW
A non-registered holder (meaning your shares are held with a broker, bank or other intermediary) is entitled to revoke a form of proxy or voting instruction form (VIF) given to an intermediary at any time leading up to the Crescent Point annual meeting. Simply contact your broker and instruct them to work with their Broadridge representative to execute a “manual revocation”. By instructing your broker to complete the manual process, this will ensure previous votes cast on the Company’s WHITE form of proxy will automatically be revoked. For assistance revoking your shares please dial 647-351-3085 x7156.
Of significance, British Columbia Investment Management (“BCIM”), a major shareholder of Crescent Point, recently disclosed its vote for Cation nominees Dallas Howe and Herbert Pinder, consistent with the recommendation previously published by Institutional Shareholder Services, the leading independent proxy advisory firm. With their vote, BCIM noted,
“We believe that the existing company board has overseen a business strategy that is not aligned with long-term shareholder interests, a sustained period of poor financial performance and sub-optimal governance practices, notably in relation to executive compensation.”
SUPPORT THE MOMENTUM FOR CHANGE AT CRESCENT POINT:
WITHHOLD YOUR VOTE FOR THE COMPANY’S SLATE
A copy of Cation Capital’s information circular is available on Crescent Point Energy Corp.’s SEDAR profile at www.sedar.com.
About Cation Capital Inc.
Cation Capital Inc., together with its affiliates and associates, is a private investment firm headquartered in Alberta, Canada. Cation invests in situations where it is able to influence operational, financial and strategic direction. Cation seeks value in companies that are experiencing financial or operational challenges, are in out of favour sectors or are otherwise in need of change to drive significant long-term value for stakeholders.