At the time, we noted that Civeo’s largest shareholder, activist firm Jana Partners (~11%), had not chimed in on the recent decision. It appears that the fund, helmed by Barry Rosenstein, was in the process of cutting a deal with the company to get 3 board members in exchange for supporting the redomiciling decision. The fund also agreed to a few other items including a standstill agreement and certain voting commitments for a brief period of time.
In addition to adding board seats, as part of the agreement the company will also form a ‘Value Creation Committee’ whose task will be to ‘review opportunities for enhancing shareholder value, including recommending a dividend policy to the Board, reviewing Civeo’s business, operations, capital structure, capital return and capital allocation policies and cost structure.’ The committee will have 5 members including two of Jana’s appointees so the fund will have a lot of influence. In case the focus on returning capital wasn’t clear enough, the company also formally announced its ‘commitment to emphasize yield as the core component of the Company’s value proposition, including a high payout ratio and return to shareholders of a substantial majority of the Company’s after-tax free cash flow (after maintenance capital expenditures).’ Get it yet?
Although not guaranteed, this should buy the company some peace for at least a little while. Now it needs to erase that nasty ~50% slide by executing on its plans and returning the business to growth.
Disclosure: Author currently is long shares of CVEO.