SCHEDULE 13D/A: Activist Investor Ned Sherwood Escalates Battle for Control of Barnwell Industries, Threatens Proxy Fight

Activist investor Ned L. Sherwood, holding nearly 30% of Barnwell Industries, has rejected management's proposals and announced his intent to launch a proxy fight for board control, citing wasteful spending and lack of performance.

Summary

• Ned L. Sherwood and his affiliates beneficially own 3,006,033.138 shares of Barnwell Industries Inc. Common Stock, representing approximately 29.90% of the company's outstanding shares.
• This filing, Amendment No. 36 to Schedule 13D, updates previous disclosures regarding Sherwood's activist stance.
• The previously established Cooperation & Support Agreement between Sherwood and Barnwell Industries has been terminated.
• Sherwood proposed amendments to the terminated agreement and director nominations to the Board to avoid a costly proxy fight, but the company has not accepted these proposals or announced its annual meeting date.
• Sherwood has issued multiple open letters to shareholders, including one on February 5, 2025, criticizing current management.
• He affirms no current intent to engage in a control transaction but intends to file a proxy statement and accompanying proxy card to solicit votes for his director nominees if the company continues to refuse his proposals.
• Sherwood criticizes the company's management for "not performing" over the past four years and for incurring "nonproductive expenses" to fight him, including retaining Skadden Arps.
• He specifically targets an "improper Special Committee" of the Board, composed of Ken Grossman and Josh Horowitz (who own less than 3.4% of shares), for allegedly wasting shareholder money on legal defense.
• Sherwood rejected the Special Committee's request to extend the Cooperation and Support Agreement for three additional years, stating his focus is on winning majority support at the 2025 Annual Meeting.
• He urges the Board to immediately set a date for the 2025 Annual Meeting, which typically occurs in the third week of April.
• Sherwood is personally funding his proxy fight expenses, contrasting with his accusation that management is using company funds for their defense.

Sentiment

Score: 3

Explanation: The document expresses strong negative sentiment towards Barnwell Industries' current management, accusing them of underperformance, wasteful spending, and self-serving actions. The activist investor is escalating a proxy fight, indicating significant dissatisfaction and a belief that current leadership is detrimental to shareholder value.

Positives

• Ned L. Sherwood is personally funding his proxy solicitation expenses, indicating strong commitment without burdening company shareholders for his campaign.
• Sherwood's efforts are aimed at enhancing shareholder value by challenging what he perceives as wasteful spending and underperformance by current management.
• The activist investor has received positive responses from shareholders to his previous letters, suggesting a degree of shareholder alignment with his concerns.

Negatives

• Barnwell Industries' management is accused of "not performing" over the past four years.
• The company is incurring "nonproductive expenses" and "wasteful legal expenses" to fight the activist investor, including retaining Skadden Arps, despite having an aggregate market value of only $18 million.
• Management is accused of "riding the gravy train" and focusing on "self-perpetuation" rather than shareholder value.
• The Board formed an "improper Special Committee" (composed of Ken Grossman and Josh Horowitz, owning less than 3.4% of shares) tasked with defending incumbents, allegedly without informing other directors of the budget.
• The company has not announced its annual meeting date, which is typically in April, leading to further delays and potential expenses.
• The company reportedly put in place a "poison pill rights plan" targeting Ned L. Sherwood.

Risks

• Significant legal and other nonproductive expenses incurred by Barnwell Industries due to the ongoing dispute and potential proxy fight, which could further deplete the company's limited resources.
• Potential for continued value destruction if current management's alleged imprudent expenditures persist.
• Uncertainty regarding the timing and outcome of the 2025 Annual Meeting of Shareholders, which could prolong the dispute.
• Risk of a costly and distracting proxy fight if the company continues to refuse director nominations proposed by Ned L. Sherwood.
• The "poison pill rights plan" could deter other potential investors or strategic actions.
• The "improper Special Committee" could lead to governance concerns and further shareholder dissent.

Future Outlook

Ned L. Sherwood and his affiliates intend to file a proxy statement and accompanying proxy card with the SEC to solicit votes for the election of their director nominees at Barnwell Industries' next annual meeting of shareholders, should the company continue to refuse their proposed nominations. Sherwood is focused on winning majority support at the 2025 Annual Meeting and expects the company to set the meeting date, typically in the third week of April, to avoid further unnecessary expenses.

Management Comments

• "I am gratified by the positive responses to my past two letters of January 21 and January 28."
• "I find all of the shareholder questions very rational and businesslike, and I've been asking many of them myself."
• "BRN management did not perform during this four-year period. Instead Kinzler and Grossman continue to ride the gravy train for themselves while the other shareholders like me suffered."
• "I believe that (other than Alex Kinzler), the company's CEO, Craig Hopkins, and Directors Laurence Narbut and Doug Woodrum have not been informed of the budget or expense commitment authorized by this Special Committee."
• "As a long-suffering shareholder, I assure you that I rejected keeping the status quo in place and I am laser focused on winning majority support at the BRN 2025 Annual Meeting."
• "I implore the Board to stop wasting company funds with wasteful legal expenses via an unchecked and improper Special Committee – and, instead, immediately set a date for the 2025 Annual Meeting."
• "I am funding all my expenses personally. If Alex and allies want to perpetuate their gravy train why are they using an improper Special Committee to fund their expenses via the company as opposed to personally paying?"
• "We must effect change at BRN before the current management destroys more value via imprudent and pointless expenditures."

Industry Context

This document details a specific corporate governance dispute between an activist investor and the management of Barnwell Industries. It does not provide information directly related to broader industry trends or competitive dynamics beyond the internal struggle for control and resource allocation within the company.

Corporate Governance

Legal Proceedings

• The Reporting Persons intend to make a filing with the SEC of a proxy statement and accompanying proxy card to solicit votes for the election of director nominees, which is a formal step in a proxy contest.
• The company is incurring significant legal expenses, including retaining Skadden Arps, to fight the activist investor, indicating an ongoing legal/governance dispute.

Stakeholder Impact

• Shareholders: Directly impacted by the ongoing dispute, potential proxy fight, and the company's alleged wasteful spending, which could erode shareholder value. They are being solicited for support in the upcoming proxy contest.
• Management/Board: The current management and Board members are under direct challenge from the activist investor, facing potential removal or significant changes in their roles and influence.
• Employees: While not explicitly mentioned, prolonged corporate governance disputes and financial strain from legal costs could indirectly affect employee morale, stability, and resource allocation for operations.

Next Steps

• Ned L. Sherwood and his affiliates intend to make a filing with the SEC of a proxy statement and accompanying proxy card to solicit votes for the election of director nominees at the next annual meeting of shareholders of Barnwell Industries, Inc.
• Ned L. Sherwood urges the Barnwell Industries Board to immediately set a date for the 2025 Annual Meeting.
• Shareholders are encouraged to email dumpkinzler@gmail.com to support the call for change at Barnwell Industries.

Key Dates

Recommendation

Keywords

Barnwell Industries, BRN, Ned L. Sherwood, MRMP-Managers LLC, Schedule 13D, Activist Investor, Proxy Fight, Corporate Governance, Shareholder Activism, Board of Directors, Annual Meeting, Shareholder Value, SEC Filing, Investment Management