A four-month battle for control of Oklahoma City–based SandRidge Energy has ended with the embattled oil and gas exploration company reaching a deal with activist hedge fund TPG-Axon Capital Management that could lead to SandRidge CEO Tom Ward's ouster by June 30.
Under the terms of the agreement announced Wednesday, SandRidge has agreed to add four seats to its board of directors and fill those spots with nominees put forward by TPG-Axon, which owns a 7.3 percent stake in the energy company. TPG-Axon had been pushing to replace the entire board.
If SandRidge does not dump Ward, who has drawn the ire of shareholders in recent months over a series of land deals that critics claim personally enriched him and his family at the company's expense, TPG-Axon will get to fill another board seat and three of SandRidge's current directors will step down. Such a move would effectively cede control of SandRidge to the hedge fund.
Covington & Burling is serving as board counsel to SandRidge in connection with its agreement with TPG-Axon. Scott Smith, the head of Covington's M&A and private equity practice and a onetime Am Law Daily Dealmaker of the Week for his role advising the company on its $1.55 billion acquisition of oil and gas rival Arena Resources in 2010, is leading a 24-lawyer team from the firm working on the matter.
Other Covington lawyers advising SandRidge on its settlement with TPG-Axon include M&A partner Stephen Infante, securities cohead David Martin, securities partners David Engvall and Keir Gumbs, securities and derivatives litigation cochair C. William Phillips, litigation partners Mark Gimbel and Robert Haney Jr., employee benefits partner Michael Francese, finance special counsel Andrew Hyman, corporate and securities counsel Leonard Chazen, and associates Brian Alexander, Rachel Beller, David Dunn, Mark Finucane, Matthew Franker, Melissa Frayer, Alan Lau, Nishchay Maskay, Daniel Nazar, Sara Needles, Kyle Rabe, Spencer Walters, and Christopher Zirpoli.
For Covington, which backs SandRidge's position that TPG-Axon has not yet taken complete control of the company, the agreement with the hedge fund is just the latest in a series of assignments the firm has handled in recent years for the energy company.
In December, Covington advised SandRidge on its $2.6 billion sale of assets in Texas's Permian Basin to closely held Sheridan Production Partners, according to our previous reports. The firm also represented the company in connection with its $1.28 billion cash-and-stock acquisition of Dynamic Offshore Resources in early 2012, and worked on a $315 million royalty trust for SandRidge through an initial public offering in 2011 that yielded $1.3 million in legal fees, according to an SEC filing at the time.
Philip Warman, a former attorney at Vinson & Elkins, serves as general counsel and corporate secretary for SandRidge. (Vinson advised underwriters on the company's royalty trust offering; the firm also handled SandRidge's $746.2 million IPO in 2007 and a $500 million joint venture deal for the company in 2011 with an affiliate of South Korean private investment firm Atinum Partners.)
The terms of SandRidge's settlement with TPG-Axon call for the company's board to retain an outside firm to conduct an independent review of the transactions involving Ward and his family. Warman did not respond to a request for comment about whether a firm has yet been chosen to take on that role, and a SandRidge spokesman declined to comment in response to a similar request.
Taking the lead on its settlement with SandRidge for TPG-Axon, which was spun off several years ago from private equity giant TPG Capital, is renowned hedge fund adviser Schulte Roth & Zabel.
