Investment manager Mangrove Partners, Charles John Wilder Jr.'s Bluescape Energy Partners LLC and Cove Key Bluescape Holdings LP are in talks with representatives of TransAlta Corp.'s board to enhance shareholder value and seek board representation.
The group, representing approximately 10.02% of TransAlta's issued and outstanding common shares, believes that TransAlta shares are undervalued and that the Calgary, Alberta-based power generator "can create significantly more value for shareholders through improved execution and focus," according to a joint March 15 Schedule 13D filing. The group on March 6 entered into a cooperation agreement with the company.
The activist investors identified a number of opportunities for increasing shareholder value, including operational and cost excellence, asset optimization, capital and broader strategic initiatives.
"The Cooperating Parties believe that Charles John Wilder, Jr. and his team have directly relevant experience in effecting such improvements at non-regulated electricity generation and energy marketing companies as well as a long track record of creating value for all shareholders," the group said in the filing.
Mangrove Partners disclosed ownership of 20,331,863 shares, representing 7.1% of the company, and Cove Key Bluescape reported ownership of 8,202,433, or 2.9% of the company.
Prior to the filing, Mangrove Partners sold 6,591,154 TransAlta shares to Cove Key Bluescape Holdings for US$40 million.
Mangrove Partners is the second largest institutional holder of TransAlta stock. The top holder is RBC Global Asset Management Inc. with 13.49% of outstanding TransAlta shares held as of Dec. 31, 2018, according to S&P Global Market Intelligence.
In a separate March 15 statement, TransAlta said it will continue to engage in discussions with the group and will update shareholders in due course. TransAlta shares closed at US$6.22 on the New York Stock Exchange and at C$8.27 on the Toronto Stock Exchange on the same date.