DEFC14A: Sherwood Group Launches Consent Solicitation to Overhaul Barnwell Industries Board

The Sherwood Group, a significant Barnwell Industries shareholder, is seeking to replace the current board with its own nominees to improve the company's financial performance and strategic direction.

Summary

• The Sherwood Group, owning 29.90% of Barnwell Industries' common stock, is soliciting consents to remove the current board and elect its own slate of five nominees.
• The Sherwood Group believes the current board has overseen declining financial performance and a plummeting stock price, with a 53.5% decline since 2002, while the S&P 500 saw a 418.6% positive return over the same period.
• The proposals include repealing any recent amendments to the company's bylaws, removing the existing board members (Kinzler, Grossman, Horowitz, and Woodrum), and electing James C. Cornell, Heather Isidoro, Stuart I. Oran, Ned L. Sherwood, and Gregory W. Sullivan as new directors.
• The Sherwood Group aims to install a board with extensive experience in the oil and gas industry, finance, mergers & acquisitions, and investments to improve Barnwell's performance.
• The consent solicitation requires the affirmative consent of holders of a majority of the outstanding shares of common stock, which is at least 5,026,768 shares based on 10,053,534 shares outstanding as of February 10, 2025.
• The deadline for submitting consents is May 13, 2025, which is 60 calendar days from the earliest dated written consent.

Sentiment

Score: 3

Explanation: The document expresses strong dissatisfaction with the current management and board, highlighting poor performance and strategic missteps. While the proposed changes are presented optimistically, the overall tone is critical and reflects a negative outlook on the company's current state.

Positives

• The proposed board nominees bring extensive experience in the oil and gas industry, finance, mergers & acquisitions, and investments.
• The Sherwood Group intends to cut costs and expenses, objectively consider all strategic alternatives, and optimize the company's oil and gas assets.
• The Sherwood Group plans to utilize Barnwell's $49.4 million tax loss carryforward.
• Four of the five nominees are independent of the Sherwood Group, ensuring objectivity.

Negatives

• Barnwell's share price has declined by 53.5% since 2002, significantly underperforming the S&P 500.
• The Sherwood Group believes the current board has engaged in value-destroying business transactions, such as the Texas Investment with significant impairments.
• The company has underperformed its competitors on various factors.
• The Sherwood Group alleges the current board is wasting company resources to resist change and protect their positions.

Risks

• The consent solicitation may be subject to legal challenges from the current board.
• The current board may implement further measures to entrench themselves.
• The Sherwood Group may not obtain the required number of consents to succeed.
• If the consent solicitation is successful, a change of control may occur under the 2018 Equity Plan, resulting in the acceleration of the vesting of any unvested awards.

Future Outlook

The Sherwood Group aims to implement a business plan that will lead to operational and financial success for the benefit of all shareholders, focusing on optimizing oil and gas assets, identifying add-on acquisitions, and cutting costs.

Management Comments

• Ned L. Sherwood: 'Our sole objective is to put in place a Board that can execute a strategy that we believe will lead to a turnaround in financial performance and the realization of Barnwell's potential.'
• Ned L. Sherwood: 'I am tired of the endless excuses and obstacles the Company continues to claim exist in moving forward with a new board that is extremely qualified...and should be given their fair chance to turn BRN around for all stockholders before it is too late.'

Industry Context

The document highlights Barnwell's underperformance compared to its competitors, suggesting a need for strategic changes to align with industry best practices.

Comparison to Industry Standards

• The document states that Barnwell underperforms its competitors on an average of 15 different factors, beating Barnwell on approximately 70% of the factors.
• The document does not list the specific companies used for comparison.

Corporate Governance

Stakeholder Impact

• Shareholders: The outcome of the consent solicitation will significantly impact shareholder value and the company's strategic direction.
• Employees: Potential changes in management and strategy could affect employee roles and responsibilities.
• Customers and Suppliers: Changes in the company's operations and strategic focus could impact relationships with customers and suppliers.

Next Steps

• Stockholders are urged to sign, date, and return the BLUE consent card to support the Sherwood Group's proposals.
• The Sherwood Group will submit consents to Barnwell at any time following the earliest dated written consent delivered to Barnwell.
• If the consent solicitation is not successful, the Sherwood Group expects to move forward with a proxy contest in connection with the 2025 annual meeting.

Key Dates

Keywords

consent solicitation, board of directors, shareholder value, Barnwell Industries, Sherwood Group, nominees, proxy contest, corporate governance, oil and gas, investments