January 17, 2018 / 3:46 PM / 6 months ago

UPDATE 2-SandRidge meets with investor Icahn to quell rising tensions

(Adds reaction to meeting)

By Ernest Scheyder

HOUSTON, Jan 17 (Reuters) - SandRidge Energy Inc met with activist investor Carl Icahn on Wednesday over his demands for a board shake-up and other governance changes, part of a bid by the U.S. shale oil producer to quell tensions with its largest shareholder and most outspoken critic.

Icahn said in December he was considering a proxy contest to remove some or all of SandRidge's directors. A week ago, in a letter referencing the Wednesday meeting, Icahn called on the Oklahoma City-based company to replace two directors with one designated by him and the second by other large shareholders.

SandRidge declined to discuss the meeting. A representative for Icahn was not immediately available for comment.

The call for board seats came after SandRidge last month terminated a $746 million deal to acquire rival Bonanza Creek Energy Inc that Icahn and other investors said was too expensive and would burden the company with too much debt.

"I'm not necessarily against the idea of them buying some assets at a good price, but I was adamantly against diluting the shareholders, especially in order to overpay for Bonanza," Icahn said in an interview ahead of the meeting.

The billionaire investor will likely continue his harsh criticism of SandRidge Chief Executive James Bennett, whom he blasted earlier this month for overseeing "a period of massive value destruction" at the company, including a bankruptcy filing in 2016. SandRidge emerged from bankruptcy in 2017.

"I don't mind a CEO making a lot of money if the shareholders have also prospered. But this is certainly not the case here," Icahn said in the interview.

SandRidge spokesman David Kimmel said in a statement ahead of the meeting that the company's board and management "value constructive shareholder dialogue."

The company has not set a date for its 2018 shareholder meeting or a deadline for shareholders to submit resolutions for the proxy. The 2017 meeting was held in June.

Icahn, who owns 13.5 percent of the oil company, also has called on directors to remove a poison pill barring individual shareholders from accumulating more than 10 percent of shares. The measure was approved in November, days after Icahn revealed his stake.

SandRidge was set to meet with other top shareholders in addition to Icahn on Wednesday, though it was not immediately clear if those meetings took place. Guggenheim Partners Investment Management and Fir Tree Partners, both of which opposed the Bonanza Creek deal, did not respond to requests for comment.

SandRidge executives have been selling their shares. John Suter, chief operating officer; Philip Warman, SandRidge's top lawyer; and CEO Bennett have sold in aggregate more than 100,000 shares since the beginning of the year, according to regulatory filings.

Shares of SandRidge fell 1 percent to $20.03 on Wednesday as oil and natural gas prices rose. (Reporting by Ernest Scheyder; Editing by David Gregorio and Leslie Adler)

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