SUGAR LAND, Texas, March 28, 2012 /PRNewswire/ -- CVR Energy,
Inc. (NYSE: CVI), a refiner and marketer of petroleum fuels and a
majority owner of CVR Partners, LP (NYSE:UAN), a nitrogen
fertilizer producer, today sent the following open letter from its
Board of Directors to all of its stockholders recommending that
they reject the unsolicited tender offer by entities controlled by
Carl Icahn.
(Logo: http://photos.prnewswire.com/prnh/20071203/CVRLOGO)
The full text of the letter to stockholders follows:
March 28, 2012
Dear Fellow Stockholders,
As you are likely aware, Carl
Icahn has launched a tender offer to acquire CVR Energy at a
price that your Board believes substantially undervalues the
company. Mr. Icahn is also waging a proxy contest to replace
your entire Board with a slate of nominees who are largely his
current and former employees and who have little or no experience
in the petroleum or fertilizer industries. He has also issued
a series of press releases attacking the Board and management of
CVR Energy.
We believe CVR Energy stockholders should know the facts
regarding the actions your Board and management team have taken and
the milestones achieved. By executing on our strategic plan,
we believe that your team will deliver greater value for
stockholders than Mr. Icahn's offer, over both the near and long
term.
Mr. Icahn's offer is set to expire on April 2, 2012. Mr. Icahn has stated that he
will abandon the offer and his proxy fight if fewer than 36 percent
of the company's shares, other than the shares he already owns, are
tendered into the offer by his publicly announced "deadline."
We urge our stockholders not to tender into the Icahn offer
and to end his distracting and detrimental
campaign.
MR. ICAHN'S OFFER SUBSTANTIALLY UNDERVALUES CVR
ENERGY
CVR Energy has an undisputed track record of delivering
value to stockholders. CVR Energy, led by its current Board
and management team, has delivered superior results to our
stockholders over almost any time period you examine since the
company went public in 2007, far outperforming all of our peers as
well as the leading indices:
|
CVI
Price
Performance
|
Peer
Median
Performance
|
Rank
Among Peers
|
S&P
500
Performance
|
|
|
|
|
|
Since
CVI IPO
|
41%
|
-
44%
|
#1
|
-
7%
|
|
|
|
|
|
Last 3
Years
|
436%
|
67%
|
#1
|
70%
|
|
|
|
|
|
Last 1
Year
|
30%
|
14%
|
#1
|
8%
|
Note: Market data as of March 23,
2012. IPO performance based on period from October 22, 2007 to March
23, 2012. CVI initial value based on IPO price of
$19.00 per share. Peers are ALJ, DK,
HFC, TSO and WNR.
We believe that we have been able to deliver these strong
results through careful planning, the leadership of an experienced
management team and a singular focus on capitalizing on
opportunities to deliver stockholder value. Our investments
and improvements in our Coffeyville plant enabled us to expand our
operations as the NYMEX 2-1-1 crack spreads widened, helping us to
achieve record results in 2011. In addition, our team has
executed a number of important transactions to enhance stockholder
returns, including: the successful initial public offering of CVR
Partners in April 2011; the accretive
acquisition of Gary-Williams Energy Corporation in December 2011, which added additional scale and
diversity to our asset base; and, most recently, our announcement
of the initiation of regular quarterly dividends and a meaningful
special dividend funded through the proposed sale of a portion of
our CVR Partners units.
The Board of Directors and management of CVR Energy have a
plan for continued growth. We have taken a number of steps
designed to enable us to continue to deliver superior financial
returns to our stockholders – in excess of the Icahn offer – as
well as develop new opportunities. Our plan for delivering
value to our stockholders includes:
- Increasing cash flow by delivering on the synergies and
other benefits from the recently completed acquisition of the
Wynnewood refinery – the synergies
are already on track to be significantly greater than originally
expected. For example, we have been able to leverage our
aggressively-managed crude oil procurement effort along with our
growing crude oil gathering and logistics business to reduce the
cost of crude oil to supply the Wynnewood refinery.
- Capitalizing on the increasing production of North American
crude oil coming from Canada,
the Rockies and the mid-continent regions of the United
States. Given the location of our refineries and our steadily
growing crude oil gathering and logistics business, we expect this
relatively recent change in the supply environment to continue and
to allow the company to achieve superior margins and
industry-leading returns well into the foreseeable future.
- Expanding the company's crude oil gathering and logistics
business which allows for increased operating income via higher
refining margins, provides operating flexibility and builds a
platform for a potential future gathering and logistics
MLP.
- Continuing our track record of operational
excellence. Our technically driven organization's
constant focus on disciplined project management and strict safety
and environmental standards has allowed the company to maximize
operating performance. For example, our recent Coffeyville turnaround was completed ahead of
schedule and under budget. The plant is operating at full
capacity and taking advantage of continued excellent crack spreads
and Brent-WTI differentials.
- Returning capital to stockholders through the initiation
of regular quarterly cash dividends of $0.08 per share and by completing the sale of a
portion of the CVR Partners common units owned by the company to
fund a meaningful special dividend.
- Taking advantage of future
opportunities to deploy the company's increasingly strong
cash flow and asset base to seek to return
additional capital to stockholders by any appropriate
means.
MR. ICAHN'S TENDER OFFER AND PROXY FIGHT
In his recent press releases, Mr. Icahn tried to take credit for
CVR Energy's stock price performance, despite the fact that our
stock price had outperformed our peers well before he began his
detrimental campaign. We believe that our team's longstanding
track record of delivering results speaks for itself, and we have a
strategic plan to continue to deliver superior stockholder
value. On the day prior to Mr. Icahn's announced intent to
initiate an unsolicited tender offer to acquire all of our
outstanding shares, research analysts' price targets were in a
range of $30 to $35. Note that
Mr. Icahn's offer is at the very bottom of this range and that
these price targets did not reflect ANY "control premium." In
addition, our stock price increased 41.4% for the year ended
January 12, 2012 (the date Mr. Icahn
disclosed his position), as compared to a 36.1% increase in the
peer median and a 0.7% increase in the S&P 500 for the same
period.
Moreover, at least one Wall Street analyst has stated that Mr.
Icahn's tender offer has actually served as a negative
overhang on our stock and a reason to downgrade our stock,[1] a
view which is consistent with our belief that Mr. Icahn's actions
have not been beneficial for stockholders.
In addition to the inadequate offer price, there are many other
reasons for CVR Energy stockholders to reject Mr. Icahn's
tender:
- The offer does not provide common structural protections for
CVR Energy stockholders that do not tender. Stockholders
face the threat that if they do not tender into the offer, and the
offer is subsequently consummated, they will find themselves as
minority stockholders in a company with a new majority stockholder
and an entirely new Board controlled by Mr. Icahn. Further, Mr.
Icahn has stated that if the offer is completed, the company may be
delisted from the New York Stock Exchange and the remaining
outstanding shares deregistered, meaning that the company may stop
all public reporting.
- The Contingent Cash Payment Rights (CCPs) are unlikely to
deliver any incremental value to CVR Energy's
stockholders. Mr. Icahn's CCP pays out only if (1) Mr.
Icahn completes his tender offer (which requires that he obtain
complete control of the CVR Energy board), (2) a definitive
agreement to sell the Company is executed within 15 months after
doing so and (3) such sale transaction closes for a price (less
fees and expenses) in excess of $30
per share. Mr. Icahn has acknowledged that he has been
unsuccessful in finding a buyer, but he expects stockholders to
believe that the results will somehow be different if CVR Energy
stockholders give him control of the company. He also wants
CVR Energy stockholders to believe that he will seek to enter into
a definitive agreement to sell the company during that 15-month
period even though (a) he would receive all the upside of a sale
himself if he waits to execute such agreement until one day after
the fifteen-month period and (b) he is careful to say in his tender
offer documentation that he has no fiduciary duty to holders of the
CCPs and makes no commitment whatsoever to undertake any efforts to
enter into a definitive agreement to sell the company within 15
months.
- The offer is replete with conditions. The offer is
subject to 16 separate conditions, a number of which are subject to
Mr. Icahn's discretion, and some of which Mr. Icahn has not even
attempted to satisfy. As of the date of this letter, Mr.
Icahn has not even made the filing required to obtain the
regulatory approval necessary to complete his offer.
- Because of the terms of his offer, Mr. Icahn
cannot actually buy your shares on or about April 2, 2012. One of Mr. Icahn's many
conditions is that his entire slate of director nominees is elected
to CVR Energy's Board at the 2012 annual meeting. CVR
Energy's annual meeting is typically held during May (the date for
the 2012 annual meeting has not yet been announced).
Therefore, stockholders have no reason at all to tender their
shares on April 2.
Mr. Icahn has offered CVR Energy stockholders a way to end his
distracting and detrimental campaign. Mr. Icahn stated that
if he did not receive enough shares tendered by April 2nd, he would withdraw his offer and proxy
fight. Your board encourages you NOT to tender your
shares and deliver a decisive message to Mr. Icahn.
YOUR BOARD OF DIRECTORS STRONGLY RECOMMENDS THAT YOU REJECT
ICAHN'S OFFER AND NOT TENDER YOUR SHARES.
Our team says what it will do, and does what it says. From
the day we acquired our assets in June
2005 to today, our track record of delivering value to our
stockholders speaks for itself. We will continue to work hard
for you to take advantage of CVR Energy's many opportunities to
deliver superior stockholder value.
Thank you for your support.
On behalf of CVR Energy's Board of Directors
Jack Lipinski
Chairman and Chief Executive Officer
CVR Energy, Inc.
Forward Looking Statements
This news release and letter may contain forward-looking
statements. You can generally identify forward-looking
statements by our use of forward-looking terminology such as
"anticipate," "believe," "continue," "could," "estimate," "expect,"
"explore," "evaluate," "intend," "may," "might," "plan,"
"potential," "predict," "seek," "should," or "will," or the
negative thereof or other variations thereon or comparable
terminology. These forward-looking statements are only
predictions and involve known and unknown risks and uncertainties,
many of which are beyond our control. For a discussion of
risk factors which may affect our results, please see the risk
factors and other disclosures included in our Annual Report on Form
10-K for the year ended Dec. 31,
2011. These risks may cause our actual results, performance
or achievements to differ materially from any future results,
performance or achievements expressed or implied by these
forward-looking statements. Given these risks and
uncertainties, you are cautioned not to place undue reliance on
such forward-looking statements. The forward-looking
statements included in this press release and letter are made only
as of the date hereof.
About CVR Energy, Inc.
Headquartered in Sugar Land,
Texas, CVR Energy, Inc.'s subsidiary and affiliated
businesses operate independent refining assets in Coffeyville, Kan. and Wynnewood, Okla. with more than 85,000 barrels
per day of processing capacity, a marketing network for supplying
high value transportation fuels to customers through tanker trucks
and pipeline terminals, and a crude oil gathering system serving
Kansas, Oklahoma, western Missouri, southwestern Nebraska and Texas. In addition, CVR
Energy subsidiaries own a majority interest in and serve as the
general partner of CVR Partners, LP, a producer of ammonia and urea
ammonium nitrate, or UAN, fertilizers.
Important Additional Information
This communication does not constitute an offer to buy or
solicitation of an offer to sell any securities. In response
to the tender offer (as amended) commenced by IEP Energy LLC and
Icahn Enterprises Holdings L.P., as well as other entities
affiliated with Carl C. Icahn, CVR
Energy, Inc. ("CVR Energy"), has filed with the Securities and
Exchange Commission ("SEC") a Solicitation/Recommendation Statement
on Schedule 14D-9. CVR ENERGY STOCKHOLDERS ARE STRONGLY ENCOURAGED
TO READ CVR ENERGY'S SOLICITATION/RECOMMENDATION STATEMENT ON
SCHEDULE 14D-9 (AS AMENDED) BECAUSE IT CONTAINS IMPORTANT
INFORMATION. Stockholders may obtain a free copy of the
Solicitation/Recommendation Statement on Schedule 14D-9 (as
amended), as well as any other documents filed by CVR Energy, for
no charge at the SEC's website at www.sec.gov. Copies will also be
available at no charge in the "Investor Relations" section of the
company's website at www.cvrenergy.com or by writing to CVR Energy
at 2277 Plaza Drive, Suite 500, Sugar
Land, Texas, 77479, Attn: Senior Vice President, General
Counsel and Secretary.
In addition, CVR Energy will file a definitive proxy statement
with the SEC for the 2012 annual meeting of stockholders. The
definitive proxy statement will be mailed to stockholders of CVR
Energy. CVR ENERGY STOCKHOLDERS ARE URGED TO READ THE
DEFINITIVE PROXY STATEMENT AND OTHER DOCUMENTS FILED WITH THE SEC
CAREFULLY IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE AS THEY WILL
CONTAIN IMPORTANT INFORMATION. Stockholders will be able to obtain
free copies of these documents (when available) and other documents
filed with the SEC by CVR Energy through the web site maintained by
the SEC at www.sec.gov and in the "Investor Relations" section of
the company's website at www.cvrenergy.com.
Certain Information Regarding Participants
CVR Energy, its directors and certain of its executive officers
may be deemed to be participants under the rules of the SEC.
Security holders may obtain information regarding the names,
affiliations and interests of CVR Energy's directors and executive
officers in CVR Energy's Annual Report on Form 10-K for the year
ended December 31, 2011, filed with
the SEC on February 29, 2012, and its
proxy statement for the 2011 Annual Meeting, which was filed with
the SEC on April 20, 2011.
These documents can be obtained free of charge from the sources
indicated above. Additional information regarding the
interests of these participants in any proxy solicitation and a
description of their direct and indirect interests, by security
holdings or otherwise, will also be included in any definitive
proxy statement and other relevant materials to be filed with the
SEC if and when they become available.
For
further information, please contact:
|
|
|
|
Investor Relations:
|
Media
Relations:
|
|
|
Ed
Morgan
|
Steve
Eames
|
CVR
Energy, Inc.
|
CVR
Energy, Inc.
|
281-207-3388
|
281-207-3550
|
Or
|
MediaRelations@CVREnergy.com
|
Jay
Finks
|
Or
|
CVR
Energy, Inc.
|
Tom
Johnson or Chuck Burgess
|
281-207-3588
|
Abernathy
MacGregor Group
|
InvestorRelations@CVREnergy.com
|
212-371-5999
|
[1] Tender offer uncertainties front and center, downgrade to
Neutral – Macquarie Equities Research, March
7, 2012. Permission to cite this report was neither
sought nor given.
SOURCE CVR Energy, Inc.