Teesside chemicals giant Venator has come under fire from one of its major shareholders in a searing open letter that accuses the firm of being among the worst performing in its sector.
Prague-based investor J&T MS 1 SICAV - which owns about 14.3% of the pigments producer - has blamed Venator's board for a steep decline in the firm's share price since it launched on the New York Stock Exchange in summer 2017. Venator, which has headquarters at Wynyard and reported losses of £56.6m in 2021, has defended itself, saying it faced a number of headwinds include cost inflation and wider economic uncertainty and pointed to a number of actions it has taken in response, including a £41m ($50m) cost reduction plan.
J&T's letter says: "We are writing to express our serious concerns about the direction the company has taken under the watch of the current board of directors, and to reiterate our belief that additional independent shareholder representation is urgently needed in the boardroom. To be clear, J&T is not an 'activist' fund, and we generally do not go public with our concerns about a company.
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"However, after trying to reach a resolution privately for seven months and being met with apparent delay tactics and gamesmanship, we believe we have no other recourse. We now feel compelled to make our views known in order to protect our own investment and that of our fellow public shareholders."
J&T went on to say the situation "has become so dire" that Venator faces potential delisting from the New York Stock Exchange, pointing to a notice served to the company in November last year that set out why Venator was not compliant with listing standards because the average closing price of its shares was less than $1 per share over a consecutive 30 trading-day period.
The investors said efforts to turn around the business had failed and added: "Frankly, in our view, Venator is by far the worst financially performing titanium dioxide producer – and one of the worst in the entire chemical sector."
A statement from Venator said it maintained a regular and open dialogue with shareholders, whose input was welcome. It said: "Members of our board and management team have been working to engage in constructive conversations with J&T for several months and proactively scheduled a meeting recently with J&T to better understand its views. Beyond its demand for board seats, J&T has yet to offer any concrete thesis or recommendations.
"Venator is navigating unprecedented headwinds of macroeconomic uncertainty, low consumer confidence, weak demand, record high energy prices and other inflationary costs. In response, the company has taken a number of recent actions including: 1) implementing a $50m cost reduction programme, 2) closing a sale-leaseback transaction for a Color Pigments manufacturing site for $51m, and 3) entering into a definitive agreement to divest the iron oxide business from within the Color Pigments business to Cathay Industries for an enterprise value of $140m.
"We have been working hard on a path forward to address the near-term challenges of our business in this macroeconomic environment to position Venator for long-term success. We will update the market as soon as possible."
As well as its Wynyard headquarters, Venator has sites at Birtley, Gateshead, and at Hartlepool.
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