By Tom Hals
March 8 A Delaware judge on Friday barred the
board of Sandridge Energy Inc from resisting a campaign
by hedge fund TPG-Axon to replace the board of directors.
TPG-Axon has been seeking shareholder solicitations to
replace Sandridge's directors. It blames the board for the
company's poor performance and alleges that the board allowed
Chief Executive Tom Ward to engage in land deals that could
benefit him at the expense of the company.
Delaware Court of Chancery Judge Leo Strine wrote in a
38-page opinion that the company's board was barred from seeking
to revoke those consents or from relying upon revocations it had
As part of its campaign against TPG, its third-largest
shareholder, Sandridge has warned shareholders that replacing
its board would trigger a "proxy put" under a credit agreement.
That would require the company to offer to repurchase senior
notes worth $4.3 billion.
However, the current board could avoid triggering the "proxy
put" if it approved of the TPG nominees, and if it did so, then
Strine said the board could again actively seek to revoke those
shareholder consents given to TPG.
The opinion stems from a lawsuit by an individual Sandridge
investor, Gerald Kallick, who supports the TPG consent
Strine said the current board can only refuse to give its
approval to a slate of nominees if it determines the candidates
threatened to cause material harm to the corporation if they
were elected. Strine said that was not the case with the TPG
"Rather, the only 'harm' threatened is that the stockholders
will choose to seat a new board of directors," Strine wrote.
Sandridge and TPG did not immediately respond to a request