(“Ortelius Advisors”), together with the other participants named herein (collectively, “Ortelius”), intends to file a preliminary proxy statement and an accompanying WHITE proxy card with the Securities and Exchange Commission ("SEC") to be used to solicit votes for the election of its slate of highly-qualified director nominees at the 2022 annual meeting of stockholders of Trecora Resources, a Delaware corporation (the “Company”). Prince Pavlos, the asset manager is based in New York City.Ĭertain Information Concerning the Participants Founded in 2015 by Peter DeSorcy and H.R.H. Ortelius is a research-intensive, fundamental-based, activist-oriented alternative investment management firm focused on event-driven opportunities.
We look forward to engaging with you and earning your support as Ortelius works towards effecting positive change at Trecora. Given our conviction that substantial change to the Board is necessary to protect the interests of stockholders, Ortelius will continue its campaign to elect its candidates to the Board at this year’s Annual Meeting of Stockholders. We believe there are multiple paths to building and unlocking intrinsic value over the near- and long-term, and that our director nominees are well-qualified to assess the options and opportunities available to the Company with a fresh perspective, and without the biases that exist on the current Board. The mid-point of Trecora’s projected EBITDA remains below the level achieved in 2016, despite a dominant position as one of two domestic producers of high-purity pentane and hexane solvents, an advantageous market position in an industry with inelastic demand, and significant capital expenditures. The Company’s disappointing 2022 guidance is a clear indication that management is failing.
With the right leadership, Trecora can, in short order, address operational and financial issues that have plagued performance. Instead of wasting precious time and stockholder capital on half-measures and entrenchment tactics, the Company should be working with us on real solutions. Given this Board’s history of poor decision-making regarding M&A, we are particularly concerned that stockholders will be harmed and disenfranchised by a transaction overseen by this group of directors. Based on our interactions with the Company, we are concerned that Trecora is working with advisors on one or both of the following:ġ) Seeking to “self-cure” the issues on the Board by identifying new “friendly” directors that can be appointed to make superficial changes to the Board without truly threatening the status quo andĢ) Pursuing a face-saving transaction, despite the likelihood of an inferior result, given the Company’s depressed valuation and lack of negotiating leverage. Instead, they have repeatedly refused to offer constructive responses and enlisted financial and legal advisors to help maintain the status quo. However, over the past month, your Board has refused to genuinely engage with us on any of our attempts to reach a resolution in the best interests of stockholders.
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This has included our proposal to add a number of exceptional individuals with focused industry and capital markets experience to the Board, with a plan to improve operating and financial performance, optimize the capital structure, enhance stockholder communications, and assess a full range of strategic alternatives. Since then, we have actively tried to engage with the Company’s Board to reach constructive outcomes that would strengthen Trecora for the benefit of all stockholders. In our view, these unacceptable returns are mainly a result of operational missteps, poor capital allocation decisions and missed strategic opportunities, all of which are self-inflicted, causing stockholders to lose confidence in Trecora’s Board and management team. However, the Company’s stock price has chronically underperformed its peers, relevant indices and the market.
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1Īs we communicated in our February letter, Ortelius believes that Trecora has significant upside potential based on its high-quality assets, favorable industry dynamics, and considerable free cash flow generation capability.
(together with its affiliates, “Ortelius,” “we,” or “us”) owns approximately 11.3% of the outstanding common stock of Trecora Resources (“Trecora” or the “Company”), making us the Company’s largest stockholder. NEW YORK-( BUSINESS WIRE)-Ortelius Advisors, L.P., which collectively with its affiliates is the largest stockholder of Trecora Resources (NYSE: TREC), today delivered an open letter to stockholders.
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