Vulcan Power Shareholders Protest Geothermal Company’s Latest Financial Moves as Management Self-Enrichment that Dilutes Shareholder Value
DENVER, March 3 /PRNewswire/ — A shareholders group of Vulcan Power Company (“Vulcan”), representing more than 150 investors from 20 different states with more than 14 million shares of common stock, will gather in protest at the Vulcan Power Company annual meeting on Thursday, March 4, 2010. Vulcan Power is a leading geothermal energy company founded in 1991 by Steve Munson, a visionary leader and pioneer in the “green technology” of geothermal power.
In April 2009, members of the Vulcan Shareholder Rights Protection Committee ( www.vulcancommittee.com ), including Munson and others, filed a formal complaint in the Oregon Circuit Court addressing what shareholders believe to be the fraudulent takeover of Vulcan by Denham Capital and Bank of America Merrill Lynch. An article published in the September 2009 edition of The Deal, titled The Old Switcheroo, summarizes the origins of the dispute with Denham Capital and Bank of America Merrill Lynch.
Shareholder representatives will vocalize their anger with the current management team’s recent decisions affecting the long-term viability of Vulcan Power.
Recent actions made by Vulcan leadership include:
- Removal of Munson as Vulcan CEO and president;
- Dilution of original shareholder interest by issuing select new members of company management approximately 10 million shares of stock at an average of approximately $1.70 a share, less than 25 percent of the real value of the stock at its date of issuance;
- Failure to inform shareholders that nearly $48 million of a recent $108 million transaction of common and preferred stock will be used to repay a high-interest loan approved by Denham and Bank of America Merrill Lynch to Vulcan Power.
Munson recently announced his resignation under protest from the Vulcan board of directors, citing continuing efforts by Denham Capital and Bank of America Merrill Lynch, primary investors in Vulcan, to dilute the value of company stock.
In Munson’s resignation letter he stated, “This sort of practice by Wall Street types is exactly what we don’t need in taking clean, renewable, geothermal energy to the next level. Vulcan was a promising and respected green and renewable energy company. We made commitments to environmental protection and preserving cultural resources on American Indian lands the company leased, at the same time delivering promising returns to our shareholders. The current directors and company leaders have rescinded those commitments.”
Among the many long-term shareholders who will participate in the protest in Denver are retired Florida fireman Tim Shea and retired Michigan educator Douglas Frosch, both of whom have invested significantly in Vulcan, consuming their savings, pensions and even home equity to back their belief that Vulcan, under Munson, was a breakthrough company in renewable energy.
Both Shea and Frosch are willing to speak publicly about their views of current management at Vulcan and the company’s long-term prospects since Denham and Bank of America Merrill Lynch took control of the company. In addition, legendary rock promoter John Scher will also publicly discuss his experience in the mid 1990s when Denham’s Mackin assumed control of the company that had acquired a major stake in Scher’s company before wiping out its value and finally filing for bankruptcy protection.
In 2007, Denham Capital was involved in a similar case in which it was accused of the same type of corporate mismanagement after it took over Tanner Companies, Inc., a provider of oilfield services primarily in Texas and Louisiana. According to publicly available court filings, this litigation included claims by Houston, Texas-based Reata Equity Partners, LLC, a minority shareholder of Tanner, that Denham: (i) wrongfully removed David Smith as CEO of Tanner and installed a new CEO selected by Denham; (ii) diluted Reata from an 18 percent ownership to less than 1 percent ownership; (iii) excluded Reata from management of Tanner; and (v) breached fiduciary duties, engaged in fraud, oppression and statutory fraud.
Additionally, on June 5, 2009, the 133rd Judicial District Court of Harris County, Texas, imposed monetary sanctions against Tanner Companies and Denham Capital for their failure to abide by a prior court order instructing them to produce certain documents. Denham Capital appealed this order, and the case settled on a confidential basis prior to trial and the appeal being heard.
Vulcan Power Company ( www.vulcanpower.com ), founded by Steve Munson in 1991, is a leader in the “green technology” of geothermal power, which is the generation of electrical power from natural steam produced by the heat of the earth. The company holds a property portfolio of geothermal leases and applications covering more than 170,000 acres in Nevada, California, Oregon, and Arizona.
SOURCE Vulcan Shareholder Rights Protection Committee