Just Energy is led by founder and executive chair Rebecca MacDonald.Fred Lum/The Globe and Mail
Rob Snyder is a former competitor of Just Energy Group Inc. who has amassed an 8.3-per-cent stake in the gas and power retailer and looks to be girding for battle with its founder and board.
The Dallas-based executive, who recently sold his own company to a larger U.S. rival, is now Just Energy’s third-largest shareholder. He is not shy about criticizing its performance, with the stock down by a third this year. It closed at $3.06 on the Toronto Stock Exchange on Thursday.
Just Energy, led by founder and executive chair Rebecca MacDonald, is in the midst of a formal study of strategic alternatives, which in corporate parlance often means it is seeking buyers. Since the Mississauga-based company launched the process in early June, it has disclosed $74.1-million in charges related to nonpayment of bills by customers, raising questions about internal controls.
Last month, after increasing his position, Mr. Snyder filed notice with the U.S. Securities and Exchange Commission of his intention to communicate with the company’s board and management. He’s not commenting much publicly, but what he is saying isn’t exactly glowing.
“I have communicated my dissatisfaction to the company and leadership team, particularly as I have watched this firm circle the drain for the last five years,” Mr. Snyder said in a brief interview.
Whether he escalates his sabre rattling into a full-blown proxy fight could depend on the outcome of Just Energy’s formal process to boost value for shareholders. He declined to say whether he is drawing up plans for such a skirmish with the company, which has operations in Canada, the United States, Ireland, Germany and Japan.
His résumé shows that’s well within his skill set, however. In August, Houston-based NRG Energy Inc. completed the US$300-million takeover of Stream Energy, the retailer Mr. Snyder founded in 2004 after Texas deregulated its energy market. At the time of the sale, it had 600,000 customers in the Lone Star State, Pennsylvania and several other U.S. jurisdictions. Before Stream, Mr. Snyder worked in finance and law, focusing on private equity, mergers and acquisitions, and activist investing.
Just Energy, which has a market capitalization of just less than $460-million, is a onetime market star whose largest shareholders are Vancouver billionaire Jimmy Pattison, with 14.8 per cent, and the estate of Ron Joyce, a founder of Tim Hortons, with 11.7 per cent. Any successful proxy battle would almost certainly require their support.
Mr. Snyder has written an incendiary letter to Ms. MacDonald, new CEO Scott Gahn and the Just Energy board, criticizing the accounts receivable write-offs and warning obliquely of unspecified shareholder action should the search for strategic options be less than satisfactory.
Still to be determined is whether Just Energy has ready buyers in the wings that will pay up for its business. In recent months, the company has made a few recent strategic moves of its own to provide some stability, announcing it is selling its British business to Shell Energy Retail Ltd. for $17-million, scrapping its dividend and tacking $20-million in cost savings above a previous target of $40-million.
In late September, trade publication Energy Choice Matters, citing unnamed sources, reported Just Energy was evaluating bids from “four major known participants in the North American deregulated energy segment,” but that the process was far from complete. It also said a unsolicited proposal had recently been floated, complicating matters for the company and its advisers, Guggenheim Partners and National Bank Financial.
Just Energy declined to comment on the report, saying only that its “board is comfortable with the progress to date” on the strategic review. It has no set deadline for completion of the process.
Regarding Mr. Snyder and his actions, the company said in a statement that it would not comment on any discussions it has with shareholders.
If anything, his appearance on the scene bodes well for weary shareholders, said Raveel Afzaal, analyst at Canaccord Genuity.
“Mr. Snyder is very well regarded in the industry,” Mr. Afzaal said. “We believe the fact that he has aggressively added to his position in JE has increased our confidence in the company’s intrinsic value, which we believe to be close to $4 per share. In our opinion, his increasing position should add further urgency to successfully conclude the strategic review as soon as possible."
If Just Energy is unsuccessful in attracting an acceptable bid, it is possible that it could allow Mr. Snyder to nominate a couple of directors as a way to avoid a heated and costly proxy fight, Mr. Afzaal said.
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Jeffrey Jones