On April 25 the Rice brothers (Toby and Derek) sued EQT alleging the company is trying to confuse shareholders by requiring some of the board candidates the Rice boys are proposing get commingled with EQT’s own slate of candidates (see Rice Brothers Sue EQT to Prevent Proxy Manipulation). The Rice boys said the lawsuit was aimed at “preventing EQT from manipulating shareholder election.” Over the weekend the Rice boys dropped the lawsuit, claiming victory, saying EQT has relented. EQT says the lawsuit was a “tactic intended to distract focus” away from the company’s stellar first quarter results.
The Rices want to elect their own board, tossing out the existing board and following that, tossing out EQT’s current senior management. It’s a death match–winner takes all–because the winner lives.
The Rices claimed in the lawsuit that EQT was requiring Rice’s proposed board members be comingled on the same proxy form with EQT’s proposed slate of board members, thereby confusing shareholder voters. In a letter issued Sunday by EQT (copy below), CEO Rob McNally refutes that, saying Rice simply misunderstood the standard language on the forms used.
The Rices also said EQT would not approve Rice board nominees for “purposes of the change of control provisions,” meaning if the Rice slate were to win and take office without the corporation officially recognizing their power to do so, it would trigger a default on certain loans. McNally said (in the letter), “EQT has never made any public or private statement threatening to withhold such approval.”
The Rice boys issued the following press release Sunday evening to announce they are canceling the lawsuit–that EQT has caved to their demands:
Toby Z. Rice and Derek A. Rice (the Rice Team), shareholders of EQT Corporation (NYSE:EQT), today announced that they have been informed by EQT that, following a lawsuit filed by the Rice Team, EQT has removed its requirement that the Rice Team’s board nominees consent to being named in EQT’s proxy materials. EQT has also informed the Rice Team that it has approved the Rice Team’s nominees for purposes of the change of control provisions in the credit agreement, thereby eliminating the risk that EQT’s lenders would be able to declare a default in the event that the Rice Team’s nominees are elected. The lawsuit was filed by the Rice Team against EQT and its Board of Directors on April 25, 2019 in Pennsylvania Court to prevent EQT from manipulating the outcome of its upcoming contested election of directors at EQT’s 2019 Annual Meeting of Shareholders. As a result of EQT’s concessions, the Rice Team will withdraw its lawsuit.
“While we are pleased that EQT has conceded that it must withdraw its unreasonable requirements, we are deeply disappointed that we had to file a lawsuit to ensure the integrity of the upcoming contested election of directors at EQT’s 2019 Annual Meeting. We had tried to clarify these issues with EQT on multiple occasions over the course of almost three months, but it was only after we filed our lawsuit that we received any response from EQT.”
A copy of the Rice Team’s presentation outlining the its plan to deliver additional value at EQT can be found at www.eqtpathforward.com.
IMPORTANT INFORMATION
On April 22, 2019, Toby Z. Rice, together with the other participants named herein (collectively, the “Rice Group”), filed a preliminary proxy statement and accompanying WHITE proxy card with the Securities and Exchange Commission (“SEC”), and the Rice Group intends to file a definitive proxy statement and accompanying WHITE proxy card with the SEC, to be used to solicit votes for the election of its slate of highly-qualified director nominees at the 2019 annual meeting of stockholders of EQT Corporation, a Pennsylvania corporation (“EQT”).
THE RICE GROUP STRONGLY ADVISES ALL STOCKHOLDERS OF EQT TO READ THE PROXY STATEMENT AND OTHER PROXY MATERIALS NOW OR AS THEY BECOME AVAILABLE BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION. SUCH PROXY MATERIALS ARE OR WILL BE AVAILABLE AT NO CHARGE ON THE SEC’S WEB SITE AT HTTP://WWW.SEC.GOV, OR BY CONTACTING D.F. KING & CO., INC., THE RICE GROUP’S PROXY SOLICITOR, BY PHONE (212-269-5550) OR E-MAIL ([email protected]). IN ADDITION, THE PARTICIPANTS IN THIS PROXY SOLICITATION WILL PROVIDE COPIES OF THE PROXY STATEMENT WITHOUT CHARGE, WHEN AVAILABLE, UPON REQUEST. REQUESTS FOR COPIES SHOULD BE DIRECTED TO THE PARTICIPANTS’ PROXY SOLICITOR.
PARTICIPANT INFORMATION
The participants in the proxy solicitation are anticipated to be Toby Z. Rice, Derek A. Rice, the Rice Energy 2016 Irrevocable Trust (the “Rice Trust”), Andrew L. Share, Rice Investment Group, L.P. (“Rice Investment”), Daniel J. Rice III, J. Kyle Derham, William E. Jordan, Lydia I. Beebe, Lee M. Canaan, Jay C. Graham, Dr. Kathryn J. Jackson, D. Mark Leland, John F. McCartney, Daniel J. Rice IV, and Hallie A. Vanderhider.
As of the date hereof, Toby Z. Rice beneficially owns directly 400,000 shares of Common Stock, no par value, of EQT (the “Common Stock”), Derek A. Rice directly and indirectly beneficially owns 272,651 shares of Common Stock, the Rice Trust directly beneficially owns 5,676,000 shares of Common Stock, Andrew L. Share, as the trustee of the Rice Trust, may be deemed to beneficially own 5,676,000 shares of Common Stock that are beneficially owned directly by the Rice Trust, Daniel J. Rice III directly and indirectly beneficially owns 1,011,407 shares of Common Stock, J. Kyle Derham directly and indirectly beneficially owns 50,000 shares of Common Stock, Dr. Kathryn J. Jackson directly beneficially owns 500 shares of Common Stock, William E. Jordan directly and indirectly beneficially owns 103,285 shares of Common Stock, John F. McCartney directly beneficially owns 4,473 shares of Common Stock, Daniel J. Rice IV directly beneficially owns 219,609 shares of Common Stock and Hallie A. Vanderhider directly beneficially owns 5,000 shares of Common Stock. As of the date hereof, Mmes. Beebe and Canaan and Messrs. Graham and Leland and Rice Investment do not own any shares of Common Stock. (1)
Also on Sunday, we’re not sure if it was before or after the Rice press release, EQT CEO Rob McNally sent the following letter (via email) to senior management:
…
Here’s how the Pittsburgh Post-Gazette writes up the news about this latest spat:
EQT Corp. and the former leadership of Rice Energy Inc. are continuing their feud even as a lawsuit filed by Toby Rice against the Downtown-based company has been dropped.
EQT is fighting off an animated proxy challenge from Mr. Rice, his brother Derek Rice and a group of former executives from Rice Energy, which was bought by EQT for $6.7 billion in November 2017.
The Rice team claims that EQT has mismanaged the company’s assets over the past year and a half and hasn’t delivered the results it should have after the companies combined. Mr. Rice is aiming to replace EQT’s CEO Rob McNally and to win enough votes to install nine new board members.
The latest spat between the two camps manifested two weeks ago when EQT announced its improved first quarter earnings and Toby Rice filed a lawsuit against the company alleging that EQT was trying to bias the proxy vote through tricky legal language in its board nomination process.
On Sunday evening, EQT sent an e-mail to its senior management saying Mr. Rice was inventing something that wasn’t there to stir up controversy.
“It is unfortunate that these PR-inspired, diversionary tactics have been employed to take attention away from the terrific work that you are all doing at EQT,” Mr. McNally wrote.
EQT clarified the language that prompted the lawsuit and approved all nine Rice nominees for the sole purpose of avoiding a violation of its credit agreement that might have occurred after a change in control.
“To be clear, EQT does not support the slate of Rice nominees and believes that their election is not in the best interests of shareholders,” Mr. McNally stressed.
The Rice team released its own version of how this played out. In announcing that Mr. Rice was dropping the lawsuit filed in the Allegheny County Court of Common Pleas on April 25, he predicted that “shareholders will be very frustrated that EQT’s management and board seem more focused on playing legal games than they are on enabling EQT to fulfill its potential.”
The proxy fight looks like it’s headed straight for EQT’s annual shareholder meeting, scheduled for July 10.
While the Rice team has already filed its proxy card with the Securities and Exchange Commission, EQT hasn’t released its own. It is expected to nominate 12 director candidates.
But the company has filed a large portion of the information that’s typically included in the proxy statement, such as executive and board compensation.
For example, Mr. McNally earned $5.3 million in 2018, according to the document, about 50 times more than the average EQT employee whose salary is $114,490.
The filing also revealed that Erin Centofanti, who was named to lead EQT’s production division in October, resigned on April 22, the day Gary Gould began as the company’s COO. Mr. Gould was brought in to allay shareholder anxiety about EQT’s operating performance.
Ms. Centofanti was demoted from her rank as the top official in charge of production at the company when Mr. Gould arrived and chose to leave, said EQT spokesman Michael Laffin.
“We thank her for her service and wish her all the best,” he said. (2)
(1) Team Rice (May 5, 2019) – Rice Team Announces That EQT Has Belatedly Removed Nominee Consent Requirement and Has Approved Rice Nominees For Purposes of a Change of Control
(2) Pittsburgh (PA) Post-Gazette (May 6, 2019) – EQT and Rice Energy resolve lawsuit but feud continues
This post appeared first on Marcellus Drilling News.