Venator Investor Seeks Urgent Board Change

16.01.2023 - Venator’s second-largest investor, Czech private equity fund J&T MS 1 SICAV, is asking for a seat on the board of the UK-headquartered multinational pigments and additives producer, citing major concerns about its financial underperformance and massive shareholder value destruction.

The private equity group, which owns 14.25% of Venator, sent a public letter to Venator on Jan. 10 proposing Martin Seycek, a member of J&T MS 1 SICAV's supervisory board, as a director, as well as another independent director - nominated by itself.

It argues that independent shareholder representation is urgently needed as the incumbent board “appears to have squandered its credibility with investors,” pointing out that Venator’s share price has plunged 96% since its IPO price in August 2017 – and 78% since the Jan. 4, 2021 announcement that representatives of SK Capital had joined the board.

J&T accuses Venator’s board of being dominated by Huntsman and SK Capital executives with experience confined to just the chemicals industry and none in other areas, such as corporate governance, finance and operations for example. Huntsman CEO Peter Huntsman and former Huntsman executive and senior director at SK Capital Daniele Ferrari are both on Venator’s board.

In addition, J&T said Venator has been unable to produce positive cash flow, which has likely hindered reinvestment and delivered “severely low” gross margins.

Last November, Venator received written notice that it faced a potential delisting from the New York Stock Exchange and hired restructuring experts Alvarez & Marsal that same month to advise on “a range of operational and financial actions.”

J&T said it has tried to engage with Venator privately since May 2022, but discussions have been kept at management rather than director level, leaving the investor with the impression that it was “experiencing gamesmanship rather than genuine constructiveness.”

Venator has not officially responded to J&T’s concerns. However, the company told Reuters that it had been “working hard on a path forward to address the near-term challenges of our business,” blaming some of its problems on record-high energy prices, week demand and inflation.

In the fourth quarter of 2022, Venator agreed to a sale-leaseback transaction for its color pigments facility in Los Angeles, California, USA, for $51.3 million and agreed to sell its iron oxide business to Cathay Industries for $140 million. 

Author: Elaine Burridge, Freelance Journalist