In a letter to shareholders, the EQT Corp.'s (NYSE: EQT) board of directors today recommended that shareholders “support the EQT team and strategy that is delivering results” by voting for “EQT’s 12 highly qualified director nominees.” The letter comes in response to the ongoing battle for control with Rice Brothers Toby and Derek, who own around 3% of EQT and have been pushing for a change in its strategy and a shakeup of the board.
EQT sent the letter in coordination with its definitive proxy statement with the U.S. Securities and Exchange Commission in connection with the company’s 2019 Annual Meeting of Shareholders scheduled for July 10. EQT shareholders of record as of the close of business on May 14 will be entitled to vote at the Annual Meeting.
On May 8 EQT said it will replace three long-serving members of its board of directors, though the move did little to cool down the proxy battle the Appalachia shale producer is facing.
The company has nominated Janet L. Carrig, James T. McManus II and Valerie A. Mitchell to replace the outgoing directors, which include Board Chairman James Rohr, A. Bray Cary Jr. and Lee T. Todd Jr., who will not be seeking reelection at the 2019 annual meeting to be held in July.
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On May 9, Toby and Derek Rice, said the board changes are not enough to bring about the change needed at EQT. This also followed a lawsuit against EQT filed by Toby Rice in late April that he later dropped.
Last week, the Rice brothers said Carrig and McManus appear qualified to serve on the board and reduced their own nominees by two.
In the letter, the EQT board said:
• EQT has transformed into a focused pure play upstream industry leader with a simplified corporate structure and a refreshed Board and leadership team;
• The new EQT team is successfully executing an ambitious, realistic strategic plan to drive substantial and sustainable free cash flow growth and value creation;
• EQT generated more than $300 million of adjusted free cash flow2 in the last two quarters;
• The company is on track to achieve approximately $300 million to $400 million of adjusted free cash flow2 in 2019, and at least $2.9 billion of adjusted free cash flow2 through 2023;
• EQT’s independent, diverse board slate has the right skills and experience to oversee EQT’s progress; and
• The board values feedback from shareholders and is committed to continually enhancing governance as demonstrated by the company’s three new independent director nominees and use of a universal proxy card.
Read the entire letter here.
The letter went on to say that the board has carefully considered the Toby Rice slate and “determined the EQT nominees are better suited to continue to oversee EQT’s successful transformation.”
It also indicated the board believes the Rice brothers campaign is “designed to install Toby as CEO and his family and friends on the board and management team.”
As if that wasn’t enough, they went on to say the believe that “the Toby Rice plan is fundamentally flawed and unrealistic, would be destabilizing and value destructive and is solely designed to advance the interests of the Rice family and their friends, not EQT.”
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EQT has said the company is improving across its financial parameters and that the Rice challenge—led by Toby—is based on inflated projections and outdated market conditions.