(Bloomberg) — Parkland Corp. is under renewed pressure from activist investor Engine Capital LP, which is pushing the Canadian fuel retailer to make more changes to boost its stock.
(Bloomberg) — Parkland Corp. is under renewed pressure from activist investor Engine Capital LP, which is pushing the Canadian fuel retailer to make more changes to boost its stock.
Engine Capital, which says it holds 2.5% of Parkland’s outstanding shares, sent the board a letter asking it to cut costs, sell more assets and change how executives are paid, among other suggestions. Engine in March demanded Parkland sell some businesses, and the company responded with a plan to divest C$500 million ($370 million) in assets in the next couple of years.
“We want to commend the board for taking steps over the last few months that have begun to unlock shareholder value,” New York-based Engine Capital said in the letter. “Despite these initiatives, Parkland remains deeply undervalued.”
Parkland shares have risen about 33% this year in Toronto, the seventh-best performance in the 40-company S&P/TSX Energy Index.
Parkland, in an emailed statement, pointed to its recent increase to its forecast for adjusted earnings before interest, taxes, depreciation and amortization for this year. The company also has accelerated its expectation of hitting C$2 billion of adjusted Ebitda to next year and will detail more of its strategy at an investor day on Nov. 14, spokesman Simon Scott said in the statement.
“Parkland looks forward to sharing further updates on our future growth plans and capital allocation priorities,” Scott said.
Parkland “needs to go further” in its divestiture plans, including by selling heating-oil business, Engine said. Basing executive compensation on Ebitda has encouraged too many acquisitions and should be changed to a per-share metric, the firm said.
A total of C$800 million should be dedicated to share buybacks in 2024 and 2025, and debt should be paid down by C$600 million during the same span, mostly from asset sales, Engine Capital said.
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