Chaparral Energy and Six Other SEC Filings

Strategic Value Partners disclosed on Dec. 26 that it owned a 30% interest in oil-and-natural-gas explorer, equal to 13,902,367 shares. Strategic Value revealed that on Dec. 20 it entered into an amended and restated support agreement that allowed Strategic Value to nominate two representatives to Chaparral’s board of directors at the upcoming 2020 annual shareholders meeting. The agreement includes customary standstill provisions that also precludes Strategic Value from owning more than a 31% interest in Chaparral.

Original Filings

Savara (SVRA)

Bain Capital Life Sciences and an affiliate reported a new position in the lung-disease-focused biopharmaceutical company of 5,128,593 shares, equal to 9.99% of the outstanding stock. That amount reflects the purchase of 4,571,139 shares plus prefunded warrants and warrants that would add 3,615,516 and 17,374,517 shares, respectively, if exercised through a private placement that closed on Dec. 24, 2019.

The stock and warrants were purchased in tandem at a price of $1.74 apiece and included a beneficial ownership blocker that prevents Bain Capital Life Sciences from exercising any warrant that would lift its interest in Savara to more than 9.99%. Hence the reason that Bain Capital reported a smaller stake compared with its investment. As a result of Bain’s purchase, it was given the right to designate one representative to serve on Savara’s board, which it did at the time of the placement’s close. Bain noted that as a “significant stockholder…it intends to take an active role in working with [Savara’s] management and the board on operational, financial, and strategic initiatives.”

Increases in Holdings

Groupon
(GRPN)

MIG Capital disclosed on Dec. 30 that it lifted its interest in the online marketplace stock to 28,285,024 shares, or 5% of the outstanding stock. The higher stake resulted from the purchase of 2,400,880 shares during the period of Nov. 13 through Dec. 23, 2019, at prices ranging from $2.23 to $2.92 apiece. MIG Capital has not formulated any plans or proposals relating to the investments, but revealed that it is “seeking representation” on Groupon’s board through the nomination of MIG Capital founder Richard Merage for director at Groupon’s 2020 annual shareholders meeting.

NII Holdings (NIHD)

Gamco (GBL) added to its interest in the wireless-communications holding company, raising its interest to nearly 6.8%, or 6,956,613 shares. During the period of Oct. 28 through Dec. 24, Gamco sold 237,648 shares at $2.10 to $2.16 each and purchased 1,388,767 shares from $1.74 and $2.16 apiece. Though no reason was cited, NII Holdings announced on Dec. 18 that it plans to dissolve and delist from Nasdaq with the suspension of trading in NII Holdings to occur before the open of Jan. 2, 2020. The firm’s liquidation is in conjunction with the sale of its only business, Nextel Brazil, that closed the same day. As a result of the sale and the upcoming dissolution, NII expects to return a total of $227 million to $280 million to common shareholders ($2.17 to $2.68 per share) through late next year.

USA Technologies
(USAT)

Antara Capital revealed that it holds 4,544,775 shares of the payments processing firm, equal to 7.1% of the tradable stock. From Nov. 13 to Dec. 30, 2019, Antara purchased a total of 754,775 shares at prices ranging from $6.23 to $7.10 apiece. Antara initiated a new position in USA Technologies through a stock purchase agreement dated Oct. 9, 2019, an arrangement where Antara bought 3,800,000 shares at $5.25 each. On the closing date of that purchase agreement, Antara also provided USA Technologies a $30 million senior secured term loan facility. To date, Antara has not disclosed any board representation as the result of its capital agreements or other investments.

Decreases in Holdings

Homology Medicines (FIXX)

Deerfield Capital reported a lower position in the genetics-focused biopharmaceutical company of 5,245,638 shares. That amount accounts for the sale of 514,730 shares at prices ranging from $21.50 to $22.30 each on Dec. 19 through Dec. 24.

After those sales, Deerfield holds approximately 11.9% of Homology’s tradable stock.

Univar Solutions (UNVR)

Temasek Holdings cut its position in the specialty-chemicals maker to 7,652,910 shares.

“As a part of reviewing its investment,” Temasek sold 1,976,625 shares during the period of Nov. 8 through Dec. 20 at a per share price range of $24 to $24.75.

The 21% cut to its stake now gives Temasek Holdings a 4.5% interest in Univar. No other details were cited for the divestiture.

THE ACTIVIST SPOTLIGHT

Immersion
(IMMR)

Business: Licensor of haptic technologies

Stock Market Value: $241million ($7.57/share)

Investor’s Average Cost: $8.76 per share

What’s Happening: Viex Capital is nominating five candidates to the company’s seven-person board.

Key Numbers and dates:

$16.49: Immersion’s stock price in June of 2018

11.78%: common owned by Viex

15.40%: common owned by Raging Capital

June: expected date of this year’s annual meeting

Behind the Scenes: Viex previously filed a 13D on Immersion in 2016 and was able to get two directors on the board who are no longer there. Immersion has had many positive developments, including the settlement of lawsuits, the appointment of a new CEO, and licensing agreements with
Sony
and
Samsung Electronics.

However, the company’s stock has not performed well. There are multiple paths to value here, such as lowering its operating expenses, buying back stock, and evaluating strategic options. But Viex thinks that the board has not implemented a credible business plan, has shown no regard for shareholders, and has engaged in irresponsible governance.

Viex believes that its nominees will protect all shareholders. Raging Capital, the company’s largest shareholder, has previously been activist here and has a person on the board, but is philosophically of like mind with Viex and could be an ally. If it sides with Viex, that would be a very high hurdle for the incumbent board to overcome.

The company responded that five new members have joined the board in 2019, and the board remains highly engaged with management to ensure that Immersion’s strategic and operating plans are fully aligned with the best interest of all shareholders.

–Kenneth Squire

The 13D Activist Fund, a mutual fund run by an affiliate of the author and not connected to Barron’s, has no position in Immersion. In addition, the author publishes and sells 13D research reports, whose buyers may include representatives of participants in, and targets of, shareholder activism.

Email: [email protected]