Carl C. Icahn Issues Open Letter to Stockholders of Southwest Gas
Sunny Isles Beach, Florida, April 19, 2022 — Today, Carl C. Icahn released the following open letter to the stockholders of Southwest Gas Holdings, Inc. (NYSE:SWX).
Investor Contacts:
Harkins Kovler, LLC
Peter Harkins / Jordan Kovler
(212) 468-5390 / (212) 468-5384
pharkins@harkinskovler.com / jkovler@harkinskovler.com
Q1 2022 hedge fund letters, conferences and more
CARL C. ICAHN
16690 Collins Avenue, Suite PH-1
Sunny Isles Beach, FL 33160
April 19, 2022
Dear Fellow SWX Stockholders:
Yesterday’s announcement by SWX appears to be a continuation of the desperate defense “strategy” that has been employed thus far by the incumbent board of directors and management team – doing as little as possible to try to win the proxy contest while at the same maintaining full optionality to further entrench and enrich themselves. SWX will now have you believe that they are running a legitimate process to explore strategic alternatives. They will claim in the proxy contest something like, “we are running a sales process – trust us to deliver a good outcome – we don’t need any change to the board of directors to create shareholder value.”
Additionally, SWX neglects to tell you that selling the company could take at least one and a half years to complete, given required regulatory approvals. This is the same board that has easily wasted $400 million of shareholder money (Questar overpayment + discounted share issuance) simply in a rush to entrench themselves at your expense.
Ask yourself: are you willing to trust this board and CEO John Hester for another year and a half to find out whether they will destroy any deal they theoretically might have and thus stay entrenched?
SWX’s press release also makes two very important points: (1) SWX will provide shareholders with little or no information regarding the purported “process;” and (2) SWX will provide no assurances that the purported “process” will result in a deal that is favorable to shareholders. Note that the release says absolutely nothing about the price, date, timing, buyer or conditions contained within the purported “indication of interest,” nor does the release mention anything that would permit shareholders to hold the incumbent board accountable if a satisfactory transaction is not achieved.
“Southwest Gas does not intend to make any further public comment regarding the exploration of alternatives until it has been completed or the Company determines that a disclosure is required. Any transaction will be subject to closing contingencies and no assurances can be given regarding the outcome or timing of the alternatives process or any transaction closing.”
Now that SWX’s hand has been forced, they have finally come to our position that a strategic review of all businesses is warranted. Unlike the incumbent board and management, our nominees would execute strategic alternatives through an open and transparent process while at the same time improving utility operations and financial performance to maximize shareholder value in all cases. We believe that our new board is essential to running a fulsome process and will be able to act unemotionally and will look after ALL of SWX’s stakeholders – not just the wellbeing of CEO John Hester and his cronies. We believe that the incumbent board will seek to sell SWX to their preferred buyers at a material discount to prices offered by non-preferred buyers. What makes a preferred buyer you may ask? One that keeps CEO John Hester in place for many years at an increased compensation package and, better yet, a new and improved golden parachute. Why not keep the same board in place too while they’re at it?! Additionally, a true competitive sales process could take six months to result in definitive documents and a year to a year and a half after that to receive final regulatory approval. In the interim, shareholders run the potentially catastrophic risk of SWX continuing to be operated by the incumbent board and management team who have a long-standing track record of questionable choices and poor financial and operational results.
Ask yourself: are you willing to trust this board for another year and a half to find out what they can deliver? We certainly are not.
SWX’s incumbent directors have done nothing to deserve your trust. They have already shown that they have little concern for shareholder value and significant concern for their own bank accounts. No nefarious behavior can be ruled out. This is the same board that just sold shares at $74 ($71.50 after fees) when a superior offer was available at $82.50. This is the same board that rushed to overpay for Questar by hundreds of millions of dollars to entrench themselves. This is the same board that sat idly as the asset promptly saw its EBITDA decline by 7% in a matter of months. This is the same board that never explained the irrationality of having to issue up to 25% of the market cap at prices in the $60s and then recommended that shareholders should not tender at $82.50. This is the same board that burned millions of shareholder dollars to purchase terrible advice from Lazard time and time again yet now we are expected to rely on Lazard to look after those shareholders’ best interests?!
Ask yourself: do you trust this board and CEO to have carte blanche to do the right thing for the next year and a half when they have never done the “right” thing before?
We believe the choice is clear – vote FOR our highly qualified and independent directors. They have the utility, regulatory, financial and governance expertise required to deliver maximum value.
Sincerely yours,
Carl C. Icahn
