The Morning Brief: Greenlight Nominates Three to GM Board

April 13, 2017   Stephen Taub


Einhorn says his firm is pursuing a proxy fight because GM refuses to let ratings agencies asses his plan for the company.

Greenlight Capital is taking its fight with General Motors to shareholders.

The sometime-activist hedge fund firm, which earlier proposed splitting the car maker’s stock into two classes, has nominated three individuals to the company’s board of directors. They include Greenlight director of research Vinit Sethi, telecommunications industry legend Leo Hindery Jr. and William N. Thorndike Jr., founder and managing director of private equity firm Housatonic Partners and chairman of CONSOL Energy, whose stock is one of Greenlight’s biggest winners over the past year or two.

In an interview with Reuters, Greenlight’s David Einhorn said one of the biggest reasons he is pursuing the proxy battle is GM’s refusal to permit the credit rating agencies to assess his plan for two classes of stock. Under Greenlight’s plan, the dividend shares would receive the current dividend and the capital appreciation shares would participate in the company’s remaining earnings, cash flows and future growth.

"Greenlight’s plan was specifically designed not to change GM’s business strategy, capital allocation priorities or financial policy," Greenlight states in its announcement. "However, Greenlight believes that GM has embarked on a campaign specifically designed to mischaracterize the plan and mislead investors and credit rating agencies about its merits." The stock has been a major position for Greenlight for two years. Shares of GM were up very slightly after the close on Wednesday, to close at $33.94.

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Elliott Management Corp. is turning up the heat on AkzoNobel. The New York multistrategy firm and sometime activist investor is calling for a special meeting to get rid of Antony Burgmans as chairman of the supervisory board of the Dutch paint maker, according to the company. In a press release, AkzoNobel stressed that it "strongly supports" Burgmans, crediting him with "contributing to its significantly improved performance." It rejected Elliott’s request, calling Burgmans’ removal "irresponsible, disproportionate, damaging and not in the best interest of the company, its shareholders and other stakeholders."

In response, Elliott said in a statement: "Elliott views Akzo Nobel’s position rejecting the agenda item as inexplicable. Shareholders have a legal right under Dutch law to put a proposal to dismiss Mr. Burgmans onto the EGM agenda. To the extent that Akzo Nobel refuses to put this item onto the EGM agenda, Elliott intends to use its recourse to the Dutch Courts, including the Enterprise Chamber."

Elliott is irked because AkzoNobel has rejected two takeover bids from rival PPG Industries. "AkzoNobel believes that engaging with PPG on the basis of an unacceptable proposal carries the potential of significant downside for the company including its shareholders and other stakeholders," the company said in its new statement. "The latest proposal from PPG continues to significantly undervalue AkzoNobel and does not substantively address any of the concerns, risks and uncertainties AkzoNobel raised in its response to the first proposal."

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John Paulson plans to resign from the board of directors of American International Group, according to Bloomberg. The announcement is expected to be disclosed in the insurance giant’s proxy filing ahead of the company’s upcoming annual meeting. Paulson & Co. reportedly unloaded its sizable stake in AIG, although the sale has not been publicly disclosed. At year-end, it held 4.8 million shares worth $314 million. Paulson has been pushing AIG to break into three separate companies, a plan supported by octogenarian activist Carl Icahn. However, AIG Chairman Doug Steenland opposes this concept.

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Dyal Capital Partners has made another new investment. The division of Neuberger Berman Group, which acquires minority equity interests in alternative asset management firms, has taken a stake in TSSP, a global credit and credit-related investment firm affiliated with TPG Holdings. Founded in 2009, TSSP has about $20 billion in assets under management.


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