Reaffirms Need to Elect Directors that are
Committed to Improving Company Performance and Exploring a Full
Range of Alternatives to Unlock Shareholder Value
Ortelius Advisors, L.P., which collectively with its affiliates
is the largest stockholder of Trecora Resources (NYSE: TREC), today
delivered an open letter to stockholders.
***
Fellow Stockholders,
Ortelius Advisors, L.P. (together with its affiliates,
“Ortelius,” “we,” or “us”) owns approximately 11.3% of the
outstanding common stock of Trecora Resources (“Trecora” or the
“Company”), making us the Company’s largest stockholder.1
As we communicated in our February letter, Ortelius believes
that Trecora has significant upside potential based on its
high-quality assets, favorable industry dynamics, and considerable
free cash flow generation capability. However, the Company’s stock
price has chronically underperformed its peers, relevant indices
and the market. In our view, these unacceptable returns are mainly
a result of operational missteps, poor capital allocation decisions
and missed strategic opportunities, all of which are
self-inflicted, causing stockholders to lose confidence in
Trecora’s Board and management team.
Since then, we have actively tried to engage with the Company’s
Board to reach constructive outcomes that would strengthen Trecora
for the benefit of all stockholders. This has included our proposal
to add a number of exceptional individuals with focused industry
and capital markets experience to the Board, with a plan to improve
operating and financial performance, optimize the capital
structure, enhance stockholder communications, and assess a full
range of strategic alternatives.
However, over the past month, your Board has refused to
genuinely engage with us on any of our attempts to reach a
resolution in the best interests of stockholders. Instead, they
have repeatedly refused to offer constructive responses and
enlisted financial and legal advisors to help maintain the status
quo. Based on our interactions with the Company, we are concerned
that Trecora is working with advisors on one or both of the
following:
1) Seeking to “self-cure” the issues on the Board by identifying
new “friendly” directors that can be appointed to make superficial
changes to the Board without truly threatening the status quo;
and
2) Pursuing a face-saving transaction, despite the likelihood of
an inferior result, given the Company’s depressed valuation and
lack of negotiating leverage.
Given this Board’s history of poor decision-making regarding
M&A, we are particularly concerned that stockholders will be
harmed and disenfranchised by a transaction overseen by this group
of directors.
Instead of wasting precious time and stockholder capital on
half-measures and entrenchment tactics, the Company should be
working with us on real solutions. With the right leadership,
Trecora can, in short order, address operational and financial
issues that have plagued performance. The Company’s disappointing
2022 guidance is a clear indication that management is failing. The
mid-point of Trecora’s projected EBITDA remains below the level
achieved in 2016, despite a dominant position as one of two
domestic producers of high-purity pentane and hexane solvents, an
advantageous market position in an industry with inelastic demand,
and significant capital expenditures.
We believe there are multiple paths to building and unlocking
intrinsic value over the near- and long-term, and that our director
nominees are well-qualified to assess the options and opportunities
available to the Company with a fresh perspective, and without the
biases that exist on the current Board.
Given our conviction that substantial change to the Board is
necessary to protect the interests of stockholders, Ortelius will
continue its campaign to elect its candidates to the Board at this
year’s Annual Meeting of Stockholders. We look forward to engaging
with you and earning your support as Ortelius works towards
effecting positive change at Trecora.
Peter DeSorcy Managing Member Ortelius Advisors, L.P.
***
About Ortelius Advisors, L.P.
Ortelius is a research-intensive, fundamental-based,
activist-oriented alternative investment management firm focused on
event-driven opportunities. Founded in 2015 by Peter DeSorcy and
H.R.H. Prince Pavlos, the asset manager is based in New York
City.
Certain Information Concerning the Participants
Ortelius Advisors, L.P. (“Ortelius Advisors”), together with the
other participants named herein (collectively, “Ortelius”), intends
to file a preliminary proxy statement and an accompanying WHITE
proxy card with the Securities and Exchange Commission ("SEC") to
be used to solicit votes for the election of its slate of
highly-qualified director nominees at the 2022 annual meeting of
stockholders of Trecora Resources, a Delaware corporation (the
“Company”).
ORTELIUS STRONGLY ADVISES ALL STOCKHOLDERS OF THE COMPANY TO
READ THE PROXY STATEMENT AND OTHER PROXY MATERIALS AS THEY BECOME
AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. SUCH
PROXY MATERIALS WILL BE AVAILABLE AT NO CHARGE ON THE SEC’S WEBSITE
AT HTTP://WWW.SEC.GOV. 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.
The participants in the proxy solicitation are anticipated to be
Pangaea Ventures, L.P. ("Pangaea"), Temnein Ventures III, L.P.
(“Temnein”), Ortelius Advisors, Panthalassa Ventures, L.P.
(“Panthalassa”), Peter DeSorcy, Shawn Abrams, David Johnson,
Michael Lefenfeld, Ted Pettijohn, Ivona Smith and Christine Staples
(together with Messrs. Abrams, Johnson, Lefenfeld and Pettijohn and
Ms. Smith, the “Nominees”).
As of the date hereof, Pangaea directly beneficially owns
2,328,024 shares of common stock, par value $0.10 per share (the
"Common Stock"), of the Company. As of the date hereof, Temnein
directly beneficially owns 346,659 shares of Common Stock. As of
the date hereof, Panthalassa does not beneficially own any shares
of Common Stock. Ortelius Advisors, as the investment manager of
each of Pangaea and Temnein, may be deemed the beneficial owner of
an aggregate of 2,674,683 shares of Common Stock owned by Pangaea
and Temnein. Mr. DeSorcy, as the managing member of and the holder
of a controlling interest in Ortelius Advisors and the managing
member of the general partner of Ortelius Advisors, may be deemed
the beneficial owner of an aggregate of 2,674,683 shares of Common
Stock owned by Pangaea and Temnein. As of the date hereof, none of
the Nominees owns any shares of Common Stock.
***
1 Based on information publicly available at this time.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220322005329/en/
Stockholders: Okapi Partners Mark Harnett, 646-556-9350
mharnett@okapipartners.com
Media: Gagnier Communications Dan Gagnier, 646-569-5897
dg@gagnierfc.com
Trecora Resources (NYSE:TREC)
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Trecora Resources (NYSE:TREC)
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