Overview

Hedge fund Engine Capital LP has initiated a campaign to overhaul the board of directors at Parkland Corp. (PKI-T) after a strategic review, following a court ruling in favor of its largest shareholder, Simpson Oil Ltd.

Engine Capital's Demands

Engine Capital is advocating for new directors, including representatives from Simpson Oil, which owns a 19% stake in Parkland. The aim is to guide a process that may lead to the sale of Parkland, which operates over 4,000 outlets.

Concerns Over Board Performance

Engine Capital expressed their belief that the current board has failed its fiduciary duty to shareholders, calling for fresh leadership to evaluate avenues for enhancing shareholder value.

Financial Performance and Strategy

With a 2.5% stake in Parkland, Engine Capital has criticized the company’s financial performance following asset divestments and is pushing for a split of operations to boost profitability.

Operational Review Initiated

Last Wednesday, Parkland began an operational review with advisers from Goldman Sachs Canada and BofA Securities. However, they cautioned investors about the uncertainty of a transaction arising from this review.

Governance Tensions

Tensions are high regarding Parkland's governance, as Simpson Oil had a presence on the board until earlier this year. Parkland's chair aims to restore Simpson Oil's representation.

Historical Context

Last year, Parkland turned down an $8 billion takeover bid from Sunoco LP, a decision criticized by Engine Capital for a lack of board engagement with potential bidders.

Future Implications

The outcome of Engine Capital's push will have significant implications for Parkland Corp. and the retail energy landscape in Canada.